Hospital executives often come under scrutiny for the salaries and benefits they receive. According to a recent IRS survey related to chief executive officer salaries, of more than 500 hospitals, the national average income was $490,000. In addition, the salaries of hospital and other health industry executives have come under scrutiny in Congress. For-profit hospitals, which make up about 30% of hospitals, do not have to publicly disclose how much the executives at each facility earn, but nonprofit hospitals must provide that information on the IRS form 990, which are public documents. By law, hospitals are required to show that such compensation is “reasonable” when compared to pay at other similar institutions. If you were a board member of a healthcare organization, what other determinants besides the salary of other chief executives would you want information on before you determined the compensation of the chief executive of the health care organization whose board you are on? In addition, how do the responsibilities of chief executives compare to the responsibilities of other healthcare employees? Do these responsibilities warrant a substantially higher salary? Defend your answer.
Textbook–McConnell, C.R. (2021). Human resources management in Healthcare Management: Jones & Bartlett. ISBN: 9781284155136.
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Introduction: In the healthcare industry, the salaries and benefits of hospital executives, particularly chief executive officers (CEOs), have been a topic of scrutiny. As a board member of a healthcare organization, it is important to consider various determinants before determining the compensation of the CEO. Additionally, it is essential to compare the responsibilities of the CEO with those of other healthcare employees to determine if a higher salary is warranted.
1. If you were a board member of a healthcare organization, what other determinants besides the salary of other chief executives would you want information on before you determined the compensation of the chief executive of the health care organization whose board you are on?
As a board member, I would want to review the CEO’s performance and achievements over the years, as well as their leadership and communication skills. It would be important to determine if the CEO has been successful in leading the organization towards its goals, and if they have been able to effectively manage the organization’s resources. Additionally, I would want to evaluate the CEO’s educational and professional background to ensure that they have the necessary qualifications and experience to lead the organization.
2. How do the responsibilities of chief executives compare to the responsibilities of other healthcare employees? Do these responsibilities warrant a substantially higher salary? Defend your answer.
The responsibilities of a chief executive in the healthcare industry are significantly different from those of other healthcare employees. CEO responsibilities involve setting the strategic direction of the organization, meeting financial goals, overseeing the recruitment of key staff, managing the quality of care provided to patients, and implementing policies and procedures to ensure compliance with industry regulations. These responsibilities warrant a higher salary due to the high level of accountability and responsibility that comes with the role. The success of the entire organization rests on the shoulders of the CEO, who must make critical decisions that affect the lives and wellbeing of patients, staff, and the overall success of the organization. Therefore, it is essential to compensate CEOs appropriately for the challenging responsibilities they undertake in leading healthcare organizations.
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