Dive Brief:
- According to a filing with the SEC, the 2014 bonus program for executives at Nashville-based Hospital Corporation of America (HCA) are based almost exclusively on their contribution to profits.
- Under the program, anywhere from 85% to 90% of executive bonuses this year will be based on EBITDA, a standard measure of corporate profitability. The remaining 10% to 15% of incentives will be weighted only on three quality of care metrics: hospital-acquired conditions, core measures (such as heart attack metrics) and patient experience as demonstrated by HCAHPS scores.
- Milton Johnson, president and CEO of HCA, could make 140% more of his base salary if he meets or exceeds the targets set in his compensation agreement. The six executives in the bonus program could pull in a collective $4 million or $5 million during 2014 if each meet their defined targets.
Dive Insight:
This is a vivid demonstration of what Wall Street does to the provision of care in for-profit hospitals. Not-for-profit executives at least don't have to deal with the bruising pressure put on for-profit hospitals to meet stock price, profits and volume targets to succeed. There may be a place for legislation that eliminates compensation structures that place such an undue emphasis on finances.