How Value-Based Care is Chang­ing Ex­ec­u­tive Com­pen­sa­tion

Modern Healthcare - - NEWS -

Ex­ec­u­tive ben­e­fits for health­care man­agers con­tinue to move to­ward more per­for­mance-based rec­om­pense, of­ten com­bined with dif­fer­ent fla­vors of non­qual­i­fied de­ferred com­pen­sa­tion and re­tire­ment plans.

“We are see­ing more and more hos­pi­tals with com­pen­sa­tion based on value and qual­ity,” says Barry Koslow, chair­man of the board at New Eng­land Si­nai, a for-profit hospi­tal in Stoughton, Mass.

But, Koslow cau­tions, it’s too early to gen­er­al­ize about how re­tire­ment plan­ning and ex­ec­u­tive com­pen­sa­tion are chang­ing in the con­text of value-based care. “I have not seen changes at the top that re­flect value-based pay,” he says. “This is partly due to the fact that nearly ev­ery hospi­tal is get­ting paid through var­ied means: fee-for-ser­vice, bun­dles, par­tial cap­i­ta­tion, al­ter­na­tive qual­ity con­tracts and full cap­i­ta­tion, each with its own nu­ances.“

With value- based care chang­ing both the reg­u­la­tory and in­sti­tu­tional land­scapes, it’s im­por­tant for hos­pi­tals ex­ec­u­tives to care­fully con­sider what the right mix of ben­e­fits is for max­i­miz­ing com­pen­sa­tion, while min­i­miz­ing risk.

Health­care re­form ef­forts by the fed­eral govern­ment have re­sulted in more closely tracked pa­tient care met­rics, such as com­pli­ca­tions, hospi­tal-ac­quired in­fec­tions and read­mis­sions. Those same per­for­mance in­di­ca­tors are of­ten tied to man­age­ment com­pen­sa­tion. Th­ese days, bet­ter met­rics can mean higher com­pen­sa­tion.

Ex­ec­u­tive com­pen­sa­tion met­rics are a pow­er­ful re­flec­tion of an in­sti­tu­tion’s pri­or­i­ties and likely have the abil­ity to shape an ex­ec­u­tive team’s fo­cus. A 2014 Jour­nal of the Amer­i­can Med­i­cal As­so­ci­a­tion re­view found that CEO com­pen­sa­tion at non­profit U. S. hos­pi­tals varies widely, and is as­so­ci­ated with greater use of tech­nol­ogy and higher pa­tient sat­is­fac­tion, but not nec­es­sar­ily with the qual­ity of care de­liv­ered, pa­tient out­comes or com­mu­nity ben­e­fit.

The au­thors of the JAMA ar­ti­cle also un­der­scored that link­ing CEO com­pen­sa­tion to per­for­mance can be a pow­er­ful way to in­flu­ence out­comes. “Data sug­gest that met­rics cho­sen for in­clu­sion in CEO com­pen­sa­tion pack­ages can af­fect ex­ec­u­tives’ be­hav­ior,” they wrote. “Th­ese is­sues are par­tic­u­larly salient among non­profit in­sti­tu­tions, in which the met­ric of or­ga­ni­za­tional suc­cess in many in­dus­tries—the prof­itabil­ity of the or­ga­ni­za­tion—must be bal­anced against more mis­sion-driven fac­tors, such as the qual­ity of care de­liv­ered and the de­gree of com­mu­nity ben­e­fit pro­vided.”

Ty­ing out­comes to ex­ec­u­tive com­pen­sa­tion has its lim­its. “A por­tion of a CEO’s com­pen­sa­tion can fo­cus on specifics, but when it comes to out­comes, qual­ity and pa­tient sat­is­fac­tion, the pay flex may be bet­ter fo­cused at the line man­agers,” Koslow says.

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