Hay Group's annual healthcare compensation study reveals modest base salary increases for healthcare employees in 2012

Prevalence of executive benefits indicates their key role in attracting and retaining top executive talent

PHILADELPHIA, PA, September 12, 2012 – The 2012 Hay Group Healthcare Compensation Study, released today, shows planned median base salary increases of 2.9 percent in 2012 for employees of large integrated health systems (IHS). This is a slight decrease from 2011 when providers reported a planned 3.0 percent median base salary increase for healthcare employees. Conversely, hospitals (those not affiliated with systems) reported median base salary increases of 2.4 percent in 2012, a slight increase from 2.3 percent in 2011.

When looking at actual changes to base pay increases between 2011 and 2012, Chief Executive Officers experienced the most significant shift. CEOs at not-for-profit IHS received a median 3.2 percent increase in base salary for 2012, compared to a 4.0 percent increase in 2011. Similarly, hospital CEOs received a 3.0 percent increase in 2012, compared to a 5.0 percent increase in 2011.

“Uncertainty about the economy, the constitutionality of the Affordable Care Act and the upcoming presidential and Congressional elections were factors that led healthcare organizations to approach base salary adjustments with a certain amount of caution in 2012,” said Jim Otto, senior principal in Hay Group’s Healthcare Practice. “However, top-performing employees will always be in high demand. To survive healthcare’s perfect storm, providers must continue to design pay plans that motivate and retain the talent needed to help them navigate the increasingly complex healthcare environment.”

According to Hay Group’s study, executive benefits and perquisites were significantly more prevalent in IHS than in the general market. Nearly three-fourths (74 percent) of IHS offered executive long-term disability benefits, compared to only 33 percent of the general market. Other common forms of supplemental benefits offered were executive group life (offered by 65 percent of IHS, compared to 32 percent of the general market), executive short-term disability (offered by 65 percent of IHS, compared to 19 percent of the general market) and executive severance pay (offered by 76 percent of IHS, compared to 41 percent of the general market).

“Compared to just five years ago, there has been a significant uptick in the importance that healthcare executives place on supplemental benefits, and in particular, retirement benefits,” added Otto. “We expect to see more and more organizations review their offerings to confirm that the benefits remain consistent with their compensation philosophy and support their ability to attract and retain top executive talent.”

Other findings from Hay Group’s 2012 Healthcare Compensation Study include:

Total cash compensation increases mixed for CEOs. In IHS, CEOs saw a 3.6 percent increase in total cash compensation (base salary plus annual incentives), compared to 3.1 percent in 2011. On the other hand, hospital CEOs only saw a 2.0 percent increase, compared to a 6.0 increase in 2011.

Nurses saw slight increases in total pay. Hospital nurses saw a 2.5 percent pay increase in both base salary and total cash in 2012. This is an increase compared to a 2.0 percent increase in base salary and total cash in 2011.

Average rate of pay continues to increase. Hospitals increased total salaries at an average rate of 2.9 percent in 2012, compared to a 2.5 percent increase in 2011 and 2.4 percent in 2010.

About Hay Group’s 2012 Hay Group Healthcare Compensation Study
The 2012 Hay Group Healthcare Compensation Study is in its twenty-ninth (29th) year and results in two separate reports: the Integrated Healthcare Systems report and the Hospital report. Originally chartered by eight core companies, the report now provides data from 118 integrated healthcare systems as well as an additional 24 integrated healthcare subsystems, representing over 647,805 incumbents. One thousand two hundred and twelve (1,212) hospitals participated in this report, covering more than 750,000 incumbents. Of the hospitals that participated in this report, 904 participants are acute care facilities. The range of jobs covered in this study makes it the only top-to-bottom healthcare compensation database in the market. The data in these reports has an effective date of January 1, 2012.

In recognition of the difference in scope of responsibilities of similarly titled positions between organizations, jobs matched to the corporate and regional positions by participants are content evaluated using Hay Group’s proprietary job evaluation methodology. Making pay comparisons on the basis of job title alone can produce comparisons that do not reflect job content or complexity. Hay Group’s job evaluation methodology eliminates the potential of an inaccurate outcome by examining compensation relative to job content and complexity rather than merely by job title or company size.

Additional information about Hay Group’s reward information services can be found at http://bit.ly/TmzZrb. Media inquiries and interview requests can be directed to Andrea Friedman at andrea@blisspr.com or at 212-584-5476.

About Hay Group
Hay Group is a global consulting firm that works with leaders to transform strategy into reality. We develop talent, organize people to be more effective, and motivate them to perform at their best. With 85 offices in 48 countries, we work with over 7,000 clients across the world. Our clients are from the private, public, and not-for-profit sectors, across every major industry and represent diverse business challenges. Our focus is on making change happen and helping people and organizations realize their potential.