Healthcare Issues & Trends

Advice & Insights for healthcare's Leaders & HR Professionals

2012 National Healthcare Staff Compensation Survey Results Published

Posted on July 26, 2012 by Gallagher Integrated

Integrated Healthcare Strategies published its 2012 National Healthcare Staff Compensation Survey.  In this post, we share highlights from the benchmark salary data.

Co-sponsored by The American Society for Healthcare Human Resources Administration (ASHHRA), the 2012 National Healthcare Staff Compensation Survey reported  the following data:

  • The average projected merit increase over the next 12 months across all staff positions to be 2.2%
  • Looking back to the previous 12 months, the national average merit increase given was 2.2%, which is consistent with prior projections for 2011
  • If trending remains consistent, the 2012 projected increase is likely to be consistent with actual increases for the year
  • The actual average for market increases over the last 12 months continues to remain low at only 1.0%, nationally, across all staff positions

The survey offers a unique feature, dedicating a special section to best practices and issues in staff compensation.  The additional insights provide organizations with supporting information to make smarter decisions when designing staff compensation programs.

“For a staff total compensation plan to be truly effective, it must consider more than just base pay.  For that reason, we have designed our survey to provide comprehensive data on salary structures, differentials, pay practices, compensation philosophies and hiring policies, incentive plans, and more for an extensive listing of positions,” said Kelly Taylor, Senior Consultant in the Staff and Director Compensation Services practice of Integrated Healthcare Strategies.  “This level of data is why our Staff Compensation Survey is a critical component to compensation plan review and design for so many healthcare organizations each year.”

Other highlights of the 2012 Survey include:

  • The addition of 20 positions, added in response to previous participant feedback
  • The survey includes data on over 250 benchmark positions

The full survey report is available to both participant and non-participant organizations.  Organizations interested in purchasing the 2012 National Healthcare Staff Compensation Survey can email our Compensation Survey Department at or can call 1-800-327-9335.

Currently open for participation is the Advanced Practice Clinician Survey, a focused study of total cash compensation, productivity, and pay practices for nurse practitioners, physician assistants, and certified nurse midwives.

View press release

Primary Care Physicians Getting Increased Medicaid Payments Starting in 2013

Posted on July 17, 2012 by Gallagher Integrated

As originally appeared in an article authored by Cathy Kibbe, Vice President, Physician Services with Integrated Healthcare Strategies.

The Centers for Medicare and Medicaid Services (CMS) will implement an increase in Medicaid payments to primary care providers effective in 2013 and 2014.  The increased payments are expected to total more than $11 billion during the two years by increasing Medicaid payments from 66% of the Medicare rate, on average, to 100% of Medicare.  While Medicaid is funded by both state and federal governments, this increase will be paid for solely with federal dollars.

This reimbursement increase is welcome news for primary care physicians and Medicaid patients alike.  In response, it is likely that more primary care physicians will open their practices to Medicaid patients or increase the number of Medicaid patients they are willing to treat.  This is particularly important because the number of Medicaid patients is expected to increase significantly in 2014 as the 2010 health care reform law will begin providing health insurance to more than 30 million Americans who currently lack such coverage.  Approximately 17 million of these people are expected to be covered by Medicaid.

It is also possible that specialists and hospital emergency departments may see fewer Medicaid patients as a result of the increased primary care reimbursement.  Medicaid patients with access to preventive care from primary care providers may be less likely to need specialty or emergent services for more complex health care needs.

In addition, a reimbursement increase could impact the number of primary care physicians seeking employment by hospitals and health care systems.  Since 2000, the percentage of primary care physicians employed by hospitals has increased significantly, according to the Medical Group Management Association (MGMA).  With increased revenues, some primary care physicians may elect to remain independent for the time being.  For those who do affiliate with a health care system, those systems may see improved practice performance from their primary care providers.

At this point, Congress would have to approve additional funding to maintain the increased reimbursement after 2014. This has led to criticism from a variety of individuals and organizations who believe that a temporary increase will not address key issues in the U.S. healthcare system.  For example, the Association of American Medical Colleges (AAMC) has projected a shortage of primary care physicians of over 45,000 by 2020.  This is largely due to the lower compensation these physicians receive compared to specialists.  A temporary reimbursement increase is less likely to have an impact on the number of medical students choosing to pursue primary care than a long-term change.

The primary care Medicaid reimbursement increase is very likely to have short-term effects on:

  1. The availability and quality of medical care for those patients who arguably need it most
  2. The financial viability of the medical professionals who treat them

The longer-term impacts of such a change remain to be seen.

Physician Leadership: Stuff They Don't Teach in Medical School

Posted on July 12, 2012 by Gallagher Integrated

As originally appeared in an article authored by William F. Jessee, MD, FACMPE, Senior Vice President and Senior Advisor with Integrated Healthcare Strategies.

Being a successful physician is a lot like being a talented musician.  The physicians who are most respected by their colleagues tend to be talented solo artists–outstanding diagnosticians, or skilled surgeons–but often not particularly skilled at coordinating the work of the other players in the healthcare orchestra.

In music, it’s the conductor who gets all the talented musicians to make beautiful music together.  He or she may be a great soloist as well, but to be a successful conductor, they have to learn to influence the work of others–to lead and to have the rest of the orchestra follow.

Unfortunately, when looking for physician leaders in healthcare organizations, often the talented soloist is chosen, and he or she is put into a position where they find themselves unable to get their colleagues to follow.  It’s not because they have become less talented as physicians, but because the skills of leadership are similar to the skills of a conductor, not those of a soloist.  And physician leadership is a skill set that they don’t teach in medical school.

Physician leaders have to inspire their colleagues to follow.  You can’t command or demand respect–it has to be earned.  Many of the skills of an effective physician leader are “soft” people skills–things like managing conflicts; giving constructive feedback on performance and behavior; team building and team decision-making; and leading organizational change processes.  All of these skills can be taught, but they are most easily acquired by experiential, hands-on learning, rather than through readings or didactic presentations.

Healthcare organizations that expect to succeed in the rapidly changing environment we face today are increasingly recognizing how critical it is to have effective physician leadership.  More and more of them are making substantial investments in developing internal leadership development programs to give current and future physician leaders the knowledge and skills they need to succeed.

In a recent study of physician leadership effectiveness conducted by Integrated Healthcare Strategies, participants were asked to prioritize the top challenges where future physician leaders must be expected to direct their talents.  The results showed that the top five issues were not clinical outcome metrics, but rather some clear frustrations with attitudes combined with difficult team work issues of apathy and mistrust.  The top challenges were:

  • Physician apathy about being involved in hospital/medical staff activities
  • Dealing with disruptive physicians (and non-peer complaints)
  • Recruitment and retention of physicians
  • How to change physician attitudes to be collaborative across specialties
  • Medical staff mistrust of board, each other, and management

All of these issues can be addressed through strong physician leadership.

An Exploration of Volunteering in Healthcare - Part 1 of 2

Posted on July 10, 2012 by Gallagher Integrated

From an article originally authored by David Rowlee, PhD, Senior Vice President with Integrated Healthcare Strategies

Volunteers play a remarkably important role in making today’s healthcare organizations successful—they are, after all, very likely to offer the first impression of an organization to patients and visitors, comfort patients and their loved ones during stays, and donate their talents and skills to enrich the operational efficiencies of healthcare systems.

Psychologists argue that people tend to be unlikely to give without getting something in return.  Although we want to believe volunteering is a completely altruistic act—an exercise of selfless giving to improve the lives of others—researchers make a strong case that to truly be motivated to volunteer, people must get something more from the experience than simply a feeling that they have helped others.  Indeed nearly every modern definition of the word “volunteering” embraces this argument and now strikes a careful balance of both selfless and self-serving elements to describe its meaning.

The most widely accepted psychological theory of why individuals volunteer is commonly referred to as the Functionalist Theory of Volunteering.  This theory suggests that there are six major categories which influence people to donate their time and skills without pay. These six categories are: values, understanding, enhancement, career, social and protective.

Recently, we embarked on a large-scale analysis which considered thousands of individual volunteer respondents from our National Volunteer Database to identify the experiences that keep volunteers most engaged in healthcare settings.  One objective was to first isolate the specific on-the-job experiences which most promote, enhance, and sustain volunteer engagement.  Another objective of our research was to align these experiences with the six categories that compel people to volunteer to pinpoint the goals and objectives that healthcare volunteers most hope to accomplish through their volunteer experiences.

Using regression modeling, an advanced statistical procedure, we identify which factors significantly correlate with an outcome of interest (in this case, volunteer engagement).  Regression analyses goes a step further than traditional correlation analysis to actually predict how much improvement can be expected in volunteer engagement if the individual’s perception of on-the-job experiences improve.  In other words, regression analysis identifies and prioritizes the experiences that must be available to healthcare volunteers in order to maximize their engagement.

Our analysis revealed two very important results.  Read full article

Is Merit Pay Dead or Just Going Through a Transformation

Posted on July 6, 2012 by Kevin Haeberie

As appeared from the original article authored by Kevin Haeberle, Senior Vice President and Senior Advisor with Integrated Healthcare Strategies

“Congratulations; your performance was “exceptional” this year – which is the highest performance level.  Our department is better because of you. You meet or exceed every one of our performance expectations.  As a result of being one of our model employees and rated “exceptional,”  we are proud to provide you an additional half percent a year above the average increase.  Based on your hourly wage, that is an additional ten cents per hour.”

How many times every year, across the nation, do managers have this conversation with one of their better employees?  Tens of thousands.  How many times do employees respond negatively?  Tens of thousands.

The concept of variable merit pay is simple.  Perform at a higher level than others and receive a higher financial award.  The objective of variable pay is to provide both a reward and a motivator.  A variable pay approach works well for competitive work teams and if the reward is substantial.  Senior leaders constantly speak of its value and cannot imagine that all employees would not be motivated by such a program.  Unfortunately, it simply does not work that way.

The underlying weakness in merit pay is that almost every employee believes they are higher performing than their peers.  Extensive energy, effort, and angst is expended every year by managers and supervisors to prove employees wrong.  Then, after disappointing a significant percentage of employees, the manager is ready to have a positive interaction and anoint an individual as a higher performer. What happens next?  Go back to the first paragraph of this blog post.  You are so exceptional, the organization is going to recognize you by offering “nickels and dimes.”

Human Resource Executives, managers, and supervisors know this truth of merit pay to be self-evident.  Then why, year after year, are millions of dollars spent and thousands of hours of management time logged, to perpetuate a program that, in most cases, does not meet its goals?

The main reason appears to be that no one wants to go back to the “time-in grade” pay increase model which provided the same increases to better, as well as lower, performers.  In today’s performance-based healthcare reimbursement and measurement model, it seems simply unacceptable to equally reward higher performers with average or lower performers.

The other hurdle limiting change is the dominant culture in healthcare which emphasizes equality and treating everyone the same - whether a patient or an employee.  Providing VIP patient care rooms and additional pay for higher performers are both methods which help an organization, but that garner constant criticism. So merit pay is deeply entrenched in your organization, but doesn’t work.  You do not want to go back to the middle ages of healthcare compensation where everyone is paid the same, and you do not have a wage increase budget to provide a substantial variance between performance levels.  What can you do?

Merit pay does not have to be killed, just transformed.  To address the belief held by most employees that they are high performers, you can alter their expectations by clarifying the definition of a high performer.  A simple, but effective approach is to announce that the organization is committed to recognizing the top 10% or 20% of performance in the organization.  This creates a clear expectation and is comparatively easy to budget.

What about those employees who are high performing but do not make the threshold?  Most people are more willing to accept a pre-defined cut-off than an unknown threshold perceived to be created after the reviews are completed.  Having a clear cut-off also creates an opportunity for discussion to help an employee achieve the next level.

Allowing an employee task force to establish the criteria for high performance, that is universally applicable to all positions, is another way to co-opt employee support and add more validity to the program.  Once the criteria has been developed, incorporating peer review into the assessment process will also create a higher level of acceptance from employees who do not meet the threshold.

What do you do about a limited wage increase budget?  Providing a sizeable cash award and a ceremony develops a higher sense of recognition and motivation than an hourly increase.  By creating a 10% or 20% threshold of those who will receive recognition, the individual amounts can be higher and more predictable for both the employee and the organization.

Spreading a relatively small amount of money over a larger base of employees tends to dilute the impact of the increase dramatically, but most healthcare organizations follow this path because of that overwhelming culture to provide “equality” even in a program designed to “distinguish.”  Focusing the dollars on a smaller number of people, with a program which helps manage expectations and allows for employee input, can help revive the expiring “merit” program concept in healthcare.

Typical variable merit programs are not dead, but they do need to be substantially transformed.  It is time for change if your managers are starting to hear from your higher performing employees, “no thank you” when offered a minimally higher additional wage increase.  Those employees are telling you that you need a more effective and simple model for rewarding high performance.  As an added bonus, your managers will also appreciate the change.

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