How should hospitals calculate CEO compensation?


There has been much to do about the salaries paid to top hospital executives. Some say that no one is worth that much. Others say that the wages are well deserved.

The real issue is not the salary, but what it’s based on.

The top hospital executive is responsible for all of the varied aspects of the institution.

Much like a city’s mayor, the CEO has to guide many activities: ­everythingfrom medical care to food service, transportation, warehousing, parking, housekeeping services, heating and air conditioning, purchasing, security, communications, billing, lawn maintenance, payroll, benefits, hiring and much more.

Basing salary on the complexity of the job makes sense. However, other factors should also come into consideration.

Some would like the pay to be based on the size of a hospital’s budget.

This simply would reward more spending and higher costs. Who wants that?

Better incentives are needed.

Perhaps hospital boards may want to consider basing CEO compensation on a few factors that would be in the public’s interest.

How about considering patient and staff satisfaction? Perhaps the ability to lower operating costs and pass the savings on to patients? Measurable quality improvements? Reducing re-admissions and re-work for patients? Better food quality? Convenient parking? How about community relationships? Should being part of the broader community be part of compensation?

What else would people suggest as being important considerations when deciding pay? Should the rewards line up with benefits for the customers?

My bet is that if you ask the customers, you would get some interesting ideas.

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