As hospital governing boards face ongoing regulatory and public scrutiny regarding executive compensation, many directors and trustees are taking a more careful and deliberate approach to executive payouts, said consultants and executives at the American College of Healthcare Executives' 2014 Congress on Healthcare Leadership.
Kenneth Ackerman, chairman of Minneapolis consulting firm INTEGRATED Healthcare Strategies, said well-run boards have grown more cautious and are demanding greater transparency as regulatory scrutiny continues. Boards are examining marketplace comparisons used to set compensation and tying pay to performance more carefully, he said. They also have grown more guarded about severance awards, which have declined.
Trustees' increased attention to executive compensation is merited amid continued public interest and ongoing scrutiny by attorneys general and the Internal Revenue Service, which recently investigated not-for-profit colleges and universities and found poor compliance with good governance practices that protect boards and organizations from penalties, Ackerman said. That not-for-profit higher education review should serve as a warning to not-for-profit healthcare organizations that the IRS may follow suit with them, he warned.