The complicated financial restructurings that follow not-for-profit hospital consolidations are requiring more advanced skill sets among chief financial officers and are leading to sharply higher pay for them, experts say.
Because of the new responsibilities, CFOs' base compensation is rising substantially, and there are greater opportunities for them to receive bonus pay. “You need someone a lot more sophisticated,” said Deb Bilak, partner at Mercer, a New York-based consulting firm.
Pay for the 20 highest-paid healthcare CFOs who received a base salary, bonus and incentive income in 2012 and 2013 rose 26.7% year over year, according to a Modern Healthcare review of the most recently available data from Internal Revenue Service filings.
Anthony Speranzo, CFO of St. Louis-based Ascension, saw one of the largest increases in combined base pay and bonus compensation. He earned a total of $3.4 million in 2013, double the $1.7 million he earned in 2012. His total compensation for 2013—including base pay, bonus, $509,676 in other compensation, $32,057 in deferred compensation and $36,706 in nontaxable benefits—was just over $4 million, making him the highest-paid CFO on the list.
An Ascension spokesman said executive compensation is set and approved by an independent compensation committee of Ascension's board on the advice of a nationally recognized compensation consultant. He added that specific performance metrics, such as Ascension's contribution to charity care, which has increased nearly 47% since 2012, are used to set compensation.
Peter Markell, CFO of Boston-based Partners HealthCare System, also received a significant pay boost. His base compensation and bonus was $1.3 million in 2013, up 15.2% from 2012. His base compensation increased 14.8%, and he received a bonus increase of 18.8%. Partners, a 12-hospital system, has been aggressive on the mergers and acquisitions front and also has an insurance arm, Neighborhood Health Plan.
CFOs will be challenged to guide their organizations through the transition from volume-based to value-based payment, said Rick Gundling, vice president of healthcare financial practices at the Healthcare Financial Management Association.
That changeover will be long and tricky, and during that time CFOs will be managing under multiple payment models with conflicting incentives, he said.
