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16 September, 2015 Posted by John G. Self Posted in Healthcare
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What Message Are You Sending With Your Performance Rewards? 

Posted September 16th, 2015 | Author: John G. Self

When I was asking a prospective hospital CEO candidate questions about quality of care and patient safety, what he had personally done to advance those initiatives, I began to sense a rising level of — let’s call it annoyance trending toward frustration.

performance rewards

Finally he blurted out, “What does this have to do with my ability to successfully manage a hospital?”

He was currently employed by one of the major investor-owned hospital management companies that, I later learned, had realigned its bonus incentive program, reducing the reward for achieving quality and patient safety targets from 35 percent of the bonus to 10 percent.  For me, this was a troubling discovery.

It is not that the candidate, or his employer for that matter, didn’t care about quality of care and patient safety, they just had other, more important priorities on the financial side of their overall performance plan.

I get it, the financial aspects of running a hospital are very important, especially for those who hold sway over a corporation’s access to capital and the job security of the leadership team — the stress tested banks, demanding hedge funds executives, fickle stock analysts, and the average Joe shareholders.  With capital access so important, especially in these turbulent times, hospital corporations and individual hospitals will be in dire straits if credit or bond funds dry up.  Failing to meet what we collectively call Wall Street’s expectations for growth in top-line revenue, expense management and year-over-year improvements in net income, can result in nasty consequences for the share price and the CEO’s job security.

An important question that I never hear discussed when the cable business channels focus on healthcare, particularly hospital management companies is, when does the best interest of the patient seep into the equation?  Oh, they talk about same store admissions, and longer term trends much in the way airline executives talk about current bookings and revenue yields, but rarely, if ever, is patient safety brought into the discussion.

To clear the air, I am not opposed to investor-owned healthcare companies.  There are certainly some companies out there candidates should avoid, but on balance I recognize and appreciate the operational discipline that these companies bring to the table.  But we must not lose sight of this truth — that quality of care and patient safety must come first, regardless of the cost reduction pressures dished out by those who are focused more on the financial return than the resources and clinical discipline it takes to safely and effectively care for a patient.

We should all be asking what message it sends when healthcare providers realign their financial performance rewards to shrink the importance of quality and safety and the CEO asks what safety and quality have to do with running a hospital.

© 2017 John Gregory Self

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