The one-year pause in big payouts to top officials at the nation's hospital systems is over.
Executives in many of the top-paying positions saw large pay bumps in 2015, driven in part by bonus packages triggered by improved quality and financial performance. The average compensation for CEOs at the 270 systems that participated in Modern Healthcare's latest survey of executive compensation surged to $1.2 million in 2015, an 8.2% increase over the previous year.
Last year's survey showed average system CEO pay declined by a half percentage point year over year.
The hefty increases were repeated across a number of titles, including chief operating officers (a 7.8% year-over-year increase in 2015); chief financial officers (up 8.4%); chief medical officers (up 6.4%); and chief nursing officers (up 7.7%). A year ago, those titles received average pay hikes of 2.2%, 1.6%, 2.5% and 1.6%, respectively. Most of the increases came from non-base compensation.
According to Modern Healthcare's 35th annual Executive Compensation Survey, total cash compensation for all titles increased 6.3% in 2015. Total cash compensation at the system level shot up 6.5% and rose 6% at the hospital level. Comparable average salaries rose last year only 3.2%.
An increase in complexity of the challenges facing top leaders at the system level has led to increased compensation, said Kathy Hastings, managing director and executive compensation practice leader at Sullivan, Cotter and Associates, the Chicago-based compensation consultant that provided data for the survey. With hospitals consolidating and under intense pressure to improve quality amid declining reimbursement, more systems are embracing performance-based pay for top executives. Pay is now even being linked to successful population health management, Hastings said.
Given the renewed upward march in pay packages, it would appear hospital system executives are performing well on the new metrics. The same appears to be true for pay packages at individual hospitals, where top officials generally did well this year with a few exceptions, according to the survey.