Despite the intense financial pressures facing hospitals, medical groups, and health systems in the current operating environment in U.S. healthcare, salaries of senior patient care organization executives continue to rise at least in peace with inflation, a new survey is confirming.
Leaders at the Chicago-based SullivanCotter consulting firm on Oct. 17 released the results of their “2024 Health Care Management and Executive Salary Survey,” with this year’s 4.6-percent pay increase for all executives surpassing the 4.4-percent growth seen in 2023.
A press release posted to Business wire on Oct. 17 stated that “The report details year-over-year changes in median base salaries – including across-the-board, merit, and market adjustments – for health care leaders. This year’s 4.6-percent increase for all executives is on par with the 4.4-percent growth seen in 2023. As has been the case for the past several years due to the increasing complexity of operations, organization size, and scope of responsibility, median increases for executives at the system level (5.2 percent) continue to outpace those for executives at subsidiary hospitals (3.5 percent).
And it quoted Bruce Greenblatt, Executive Workforce Practice leader at SullivanCotter, as stating that “The industry is experiencing a critical gap in expertise as operations grow more complex and leaders retire or continue to step away. The pool of qualified executive talent is increasingly limited, and this is placing upward pressure on total compensation – particularly via higher base salaries.”
The press release also noted that “Health system positions with median base salary increases of 5.0 percent or greater tend to be those focusing on business strategy, information technology and security, integration, care delivery excellence and legal/regulatory compliance.”
Further, it noted that, “Despite some improvements in operating margin performance, health systems continue to confront several challenges. Pressures such as ever-increasing labor costs combined with a tight market for talent, high inflation, and threats to cybersecurity are ongoing. The demand for skilled executive talent remains high given the complexity of managing care in the current climate, and the heightened scrutiny and regulatory activity surrounding executive compensation is affecting how compensation committees achieve balance across financial, operational and talent risks.”
When it comes to incentive pay, the press release noted that “Incentive awards were greater for 2023 performance as compared with 2022, reflecting an overall improvement in the operating environment. As a result, total cash compensation (TCC, equal to base salary + annual incentives) increased at a higher rate than base salaries in 2024. Median TCC for system-level executives increased by 8.3 percent, while their base salaries rose by 5.2 percent. This trend is the same for subsidiary hospital executives as incentive awards were achieved at or near target levels. Median annual incentive payouts for 2023 performance,” it noted, “were closer to target than those provided for 2022 performance, when they were moderately below target. Given that there were no shifts in annual incentive plan prevalence or award opportunity levels, year-over-year changes in TCC can be attributed to higher levels of performance.”
