The local news calls, having found the HCO’s IRS Form 990. The reporter notes that the CEO and several employed physicians are listed with generous compensation, many multiples of the community’s median family income. She’d like an explanation of the HCO’s policy. What’s the best answer? What are the key takeaways you want the reporter to put in her story?
- The HR functions in exhibit 11.2 cost a lot of money. Ten days of training will add 4 percent to payroll if the workers are replaced on the job. Gener- ous benefits will add 5–10 percent of base pay over the minimum set. Service recovery adds a small cost, as does employee counseling. A board member on the finance committee says, “We’ve gone too far with this. We have to cut back to protect our income for expansion and debt service.” How should senior leadership respond?
Full Answer Section
- Performance-Based Compensation:Executive and physician compensation is often linked to performance metrics, ensuring alignment with our mission of providing high-quality, cost-effective care.
- Focus on Value:While compensation is important, we focus on delivering exceptional value to our community. We reinvest a significant portion of our revenue into providing high-quality care, expanding access to services, and investing in new technology.
Additional Tips:
- Offer to provide the reporter with data on the average compensation for CEOs and physicians in our region or specialty.
- Highlight the HCO's commitment to community outreach programs or charity care initiatives.
Scenario 2: Concerns over HR Costs
Senior Leadership Response:
- Acknowledge and Appreciate:
Thank the board member for raising their concerns. Acknowledge the importance of financial responsibility and the need for efficient operations.
- Explain the Value of HR Functions:
- Cost-Effectiveness:Explain how strong HR practices, while having upfront costs, can lead to long-term cost savings by reducing employee turnover, improving morale, and minimizing legal risks.
- Investment in People:Investing in employee training and development fosters a skilled and engaged workforce, ultimately leading to better patient care and improved organizational performance.
- Competitive Advantage:Strong HR practices attract and retain top talent, creating a competitive advantage in the market.
- Data-Driven Approach:
- Provide data or case studies that demonstrate the positive return on investment (ROI) from HR initiatives.
- Analyze the specific costs and benefits of each HR function (training, benefits, etc.) to identify potential areas for optimization.
- Collaborative Decision-Making:
Work with the board member to develop a data-driven, cost-conscious approach to HR practices. This may involve exploring alternative training methods, renegotiating benefits packages, or streamlining certain HR processes.
By clearly explaining the rationale behind HR practices and demonstrating their long-term benefits, senior leadership can ensure the organization prioritizes both fiscal responsibility and its investment in its workforce for the sake of optimal patient care and organizational success.
Sample Answer
Addressing Compensation Concerns: Two Public Relations Scenarios
Scenario 1: High CEO and Physician Compensation
Best Answer:
Thank you for reaching out about our organization's IRS Form 990. We understand the public's interest in how non-profit healthcare organizations like ours allocate resources.
Key Takeaways for the Reporter:
- Transparency: We are committed to transparency and accountability. Our Form 990 is a public document that details our finances, including executive compensation.
- Competitive Market: We strive to attract and retain highly qualified talent, including CEOs and physicians, who are critical to delivering exceptional patient care. Competitive compensation is necessary to remain competitive in the healthcare marketplace.