One-fourth of tax-exempt healthcare organizations compensate independent board members, and 7% are considering doing so, according to a new study.
Paying directors is standard procedure at for-profit companies. But while roughly 70% of tax-exempt organizations still don't provide board member compensation, the number of board members receiving compensation seems to be up substantially, said Deb Bilak, a partner specializing in executive compensation at human resources consultant Mercer. Compensation levels also appear to be rising, she said.
Consolidation in the health industry and regulatory changes brought on by the Affordable Care Act have led to larger, more complex organizations that need to attract board members with business expertise or specific skillsets, Bilak explained.
Mercer late last year surveyed more than 50 providers, insurers and managed care organizations of varying sizes for its “Executive Compensation Policies and Practices Survey for Tax-Exempt Health Care Organizations.”
“It's not just a rubber stamp anymore,” Bilak said of a not-for-profit's board. “It really involves understanding all of the business challenges.”
Structural changes are prompting not-for-profit leaders to recruit both board members and executives from for-profit companies to help manage their newly-sophisticated organizations, Bilak said.
“When board members are in organizations that were not as complex as they are today, people were happy to be on the board as community service, but it's a very difficult job now,” Bilak said. “It's not as easy as it used to be.”
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