Amid criticism, executive pay shifts toward long-term incentives

The healthcare industry is moving away from extravagant executive perks in favor of long-term or graduated compensation benefits, according to Becker's Hospital Review.

In past years, typical executive compensation packages featured perks like private jets, club memberships and car allowances. But many now consider such benefits excessive and bad for public relations, especially during an economic downturn. Modern executive patterns trend toward more performance-based opportunities, according to the article.

For example, retirement benefits have historically been a substantial part of many executive compensation packages, Betsy Field, a senior consultant for Towers Watson specializing in compensation, told Becker's. But many organizations now fold the supplemental portion of retirement into long-term incentives, which often employ multi-year, overlapping goal roadmaps.

The dialogue about executive compensation comes nearly two years after the publication of Steven Brill's article "Bitter Pill: Why Medical Bills Are Killing Us," which invoked executive salaries while discussing rising healthcare prices. Despite the furor the article created, it did not extend to executive compensation, according to California Healthline. For example, one California healthcare system CEO referenced in the article has seen his compensation upped to $6.4 million since the story's publication. Many of Brill's proposed solutions, such as a $750,000 maximum for non-doctor salaries, are difficult to implement on both a technical and political level, according to the article.

A May analysis by the New York Times found healthcare and insurance executives' compensation was vastly greater than physician salaries, with hospital CEOs and administrators earning average base pay of $386,000 and $237,000, compared to an average of $306,000 for surgeons and $185,000 for general physicians. Moreover, those executives receive the majority of their compensation in non-salary form, the analysis found. Last June a paper from the Roosevelt Institute suggested rising executive compensation could contribute to broader income inequality.

The American Hospital Association (AHA) disputed the Times analysis, with AHA President Rich Umbdenstock saying it "do[es] a disservice to the dedicated men and women who lead America's hospitals."

To learn more:
- read the Becker's article
- here's the Healthline article

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