Affordable Care Act unfolds, nearly every aspect of the healthcare sector, from payers to hospitals to .... (HR, Marketi
HEALTHCARE LEADERS SURVEY: 2014 Forecast on Staffing and Executive Compensation
OVERVIEW >> In 2014, the healthcare industry is changing – arguably more than any other industry in the United States. As the Affordable Care Act unfolds, nearly every aspect of the healthcare sector, from payers to hospitals to employers to patients, are beginning to alter how they go about consuming, providing and paying for healthcare. Amid these seismic changes, the business of healthcare must go on, and health executives are attempting to adapt their companies’ workforces to the changes. What will healthcare staffing look like in 2014? Who will be leading health organizations during this time of change, and where will most industry turnover occur? This study, based on a survey of C-level health executives, helps answer these questions. This survey of top health leaders also helps forecast the industry’s executive compensation trends. Though much of the recent discussion has focused on physician compensation, changes are on the horizon in C-suite compensation as well, including an impending slowdown in pay increases – at least, from the view of the corner office.
THE FUTURE OF HEALTHCARE LEADERSHIP When asked which industries could feed the next generation of healthcare leadership, health executives chose finance as the top getter (92%), followed by the hospitality (55%), investment (40%) and pharmaceutical (33%) sectors. The manufacturing, information technology, and retail/supply chain industries received mentions as well. Regardless of where outside leadership comes from, health executives are cautious that non-health-experienced CEOs can be more effective than a healthcare industry veteran. A large majority (59%) of respondents said an outsider would be “somewhat effective” as a CEO, but less so than someone with healthcare experience. Fewer (17%) thought a hospital CEO hired from another industry would be equally effective as someone with healthcare experience and only 9% thought an outsider would be more effective.
Assuming industry consolidation occurs, please select the TOP 3 industries which you think will feed the next generation of healthcare leadership? Note: Multiple responses permitted
92%
55%
Hospitality
40%
33%
31%
Investment
Pharma
Other*
*Other includes IT, Manufacturing & Retail
How would you rate the effectiveness of a hospital CEO hired from another industry?
WORKFORCE CHANGES IN 2014 As the healthcare industry undergoes significant change in 2014, most health executives expect staffing levels at their companies to shift. More executives expect their company’s total workforce to decrease (44%) than increase (39%), while 16% anticipate their staffing levels to remain unchanged in 2014. However, mass hirings or layoffs are not expected – of those health organizations that plan to hire, 27% expect to augment their staff levels by up to 10%, vs. 12% that expect to augment their staff by 11% to 30%. Likewise, of those that plan to reduce staff, 33% will do so by up to 10%, and only 10% will do so by 11% to 30%. Where will most of these staffing changes occur? With a glut of new regulations and requirements in the way hospitals manage their care, information and finances, it’s no surprise that in 2014, hospital executives expect the greatest change in staffing to occur in the care management (42%), information management (41%), and clinical management (34%) departments. As interoperability between these three functions becomes more important to the financial health of hospitals and health systems, employers must ensure they have “the right people on the bus” in those areas. And while senior management appears lower on the list, a 9% turnover rate in the C-suite is significant: That means almost 1 in 10 C-level executives will change personnel in 2014.
59%
Somewhat effective, but less than someone with healthcare experience
17%
Equally effective as someone with healthcare experience
10%
No opinion
9%
More effective than someone with healthcare experience
5%
Not effective at all
What do you anticipate the average change (in terms of number of employees) will be between 2013 and 2014 for the size of your company’s total workforce overall?
33%
10%
27% 16%
12%
1% >30%
11%-30% 1%-10% Decrease
Stay the same
1%-10% 11%-30% Increase
0%
1%
>30%
No opinion
What functions do you anticipate seeing the greatest change in total headcount from 2013 to 2014? Note: Multiple responses permitted Care Management Information Management Clinical Management Operations Management General Administration inancial Management Human Resources
42% 41% 34% 26% 24% 17% 14%
Materials Mangement Medical Imaging Management
8% 7%
Senior Management
2
Finance
9%
EXECUTIVE COMPENSATION: STILL GROWING, BUT AT A SLOWER RATE Much of the discussion in health employment compensation has focused on physicians, due to drastic changes in payment levels and models from the Affordable Care Act. But changes in executive compensation are also on the horizon. Most health executives see incremental increases in their total compensation each year, including base salaries and bonuses, with the majority – 39% – reporting a 1% to 5% increase in 2013 over 2012. However, fewer are expecting their total compensation to increase in the coming year. In 2013, 57% saw a bump in their base salary, but only 53% are expecting an increase in 2014. Likewise, 33% of health executives saw a boost in their last bonus payout, but only 28% expect an increase in their next bonus payment. Health executive compensation is still growing, for sure, but at a slower rate than in the past. When it comes to long-term incentives, almost 4 in 5 healthcare leaders are not eligible for such an award. With the upcoming changes in hospital performance measurement, however, this paradigm is likely to shift.
How do you expect your total compensation for 2013 to compare to 2012?
34% 7% 1%
2%
6%
6%
>20% 11%-20% 6%-10% 1%-5% Decrease
2% 2% 2%
Stay 1%-5% 6%-10% 11%-20% >20% the Increase same
No opinion
Most executives are seeing a pay increase, albeit at a slower rate than past years. What was your change in base salary between the following years? 2013 vs. 2012
RESPONDENTS PROFILE: WHO TOOK THIS SURVEY?
39%
Increased
2014 (projected) vs. 2013
57%
Increase
39%
53%
No Change
38% 6% 3%
4% Decreased
No Change Decrease
No Opinion
72% of respondents hold a C-suite title Senior Management
Other
(CEO, President, Administrator)
(Board Member, Attorney, Etc.)
22% Operations Management (COO, Exec, V.P, Business Manager)
6% 6%
Case Management (Risk Manager, Etc.)
17% Respondents 15%
Financial Mangement (CFO, V.P./Director of Finance, Etc.)
by Title
7%
2% 5%
(HR, Marketing, Facilities Engineering, Etc.)
(CPO, Director/V.P. of Materials Management)
2013 (projected) vs. 2012
Decreased No Change
Increased
29% 33%
12% 26%
Did not receive an award
No Change
29% 17%
Decrease
23% Increase
28% 4%
Do not expect to receive an award
No Opinion
Clinical Management
(CIO, CTO)
(CMO, CMIO, Chief of Staff, Etc.)
Hospital (Children’s, General/Acute, Mult-Hospital System, Long-Term Care, Etc.)
2012 vs. 2011
General Administration
Materials Management
21%
Information Management
What was your change in annual incentive payout between the following years?
Medical Clinics/Groups and Nursing Homes
54%
33%
(Academic Medical Center, Nursing Homes, Etc.)
79%
Respondents by Type of Institution
11%
2%
Almost 4 in 5 healthcare leaders are not eligible for a long-term incentive award. Not eligible for long-term incentive award
21% Eligible for long-term incentive award Payers
Others Allied to the Field
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For More Information Julia Gier
[email protected]
About FPL Advisory Group FPL Advisory Group (FPL) (www.fpladvisorygroup.com) is a global professional services firm that specializes in executive search, compensation and management consulting solutions across the healthcare, real estate, financial, and hospitality sectors. FPL is comprised of two primary operating companies that work together to serve a common client base. Ferguson Partners Ltd. provides executive and director recruitment services. FPL Associates provides a range of specialized compensation and management consulting services. FPL is headquartered in Chicago, with offices in Boston, New York, San Francisco, Toronto, London, Hong Kong, Singapore and Tokyo.
About Modern Healthcare Custom Media Modern Healthcare Custom Media’s (www.modernhealthcare.com) dedicated team of writers and researchers develops custom content solutions designed to educate and engage readers. These custom content solutions provide in-depth information on a specific trend, topic or solution that is top-of-mind for healthcare executives.
About the Survey This briefing summarizes the results of a custom research survey conducted by Modern Healthcare Custom Media on behalf of FPL Advisory Group. The purpose of the research is to gather forecasting information concerning healthcare employment trends in 2014, including recruitment and executive compensation. Invitations to participate in a web-based survey were sent via email to 11,707 healthcare executives on October 16, 2013, and October 29, 2013. The survey was open for 22 days. As an incentive to complete the survey, respondents were offered a chance to win a $500 American Express gift card.
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