Hospital executives take home bigger paychecks in 2006

A survey finds an increasing use of incentive-based pay.

By Katherine Vogt, AMNews staff. Oct. 2, 2006.

Hospital leaders' pay is going up, in part because of the increasing number of systems that use bonuses and other incentives to reward executives.

A survey found that base salaries for executives increased 5.3% in 2006 from 2005. But total cash compensation -- including salaries, bonuses, annual incentives plans and more -- jumped 7.2% during the same period.

Authors of the survey, which was conducted by Chicago-based Sullivan, Cotter and Associates, and industry observers said the findings reflected hospitals' growing use of sophisticated compensation packages.

They also said competition for what is believed to be a small pool of top talent has forced hospitals to offer more overall compensation to lure or retain their leaders.

The survey was based on data from 874 for-profit and nonprofit hospitals and health systems.

It found that the presidents and chief executive officers of freestanding hospitals received average total cash compensation of $463,300 in 2006, up 3.8% from $446,600 the year before. Health system CEOs and presidents saw a 9.6% jump in their average total cash compensation to $870,800 this year from $794,200 in 2005.

Other executives saw their average total compensation increase anywhere from slightly less than 4% to nearly 11%. All these totals include base salary and other cash rewards.