Aligning Executive Compensation with the New Health Care Paradigm


Strong health care leadership has never been more important—or more demanding—than it is today. The reform-era chief executive is responsible for leading organizations through unprecedented transformational change that will fundamentally alter the way health care is delivered and how consumers are engaged in a system of care. Today’s CEO must have proven skills at the helm, up-to-the-minute knowledge of evolving changes in regulations, reimbursement and care delivery, and a clear understanding of the organization’s shortand long-term goals. A tall order—and one that can be supported by the design of a highly competitive, performance-based compensation program.

Governing boards of health care organizations and their compensation committees face new challenges. They must effectively and responsibly govern the executive compensation program by balancing potentially competing interests: regulatory, public, constituent and employee. On one hand, compensation levels must be competitive to recruit, motivate and retain a prepared leadership team. On the other hand, compensation levels are subject to increasing affordability, public scrutiny and regulatory compliance considerations. More than ever, compensation committees are involved in goal selection and the calibration of metrics to align pay with performance.

This monograph offers guidance on proactively considering best practices in executive pay, including the changing role of incentive compensation, good governance practices to mitigate risk and choosing appropriate peer comparison data to support the compensation decision-making process.

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