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As our industry continues to wrestle with the impacts of the Patient Protection and Affordable Care Act and value-based purchasing, it appears that a number of organizations are questioning whether their executive compensation models are appropriate to the times. Besides the more obvious issues surrounding a shift from volume- to value-based financial models, hospital trustees and directors also must respond to consumer and labor advocacy groups, which question the value of the executive team. Indeed, there have been several efforts of late to legally limit the total compensation allowable to CEOs.

This environment can create a bit of a dilemma for governing boards, as they try to balance the need for executive horsepower with a compensation package that is defensible to their constituents. And while base pay and benefits loom large in this equation, there are certainly reasons to evaluate how bonuses are structured if, in fact, bonuses should be paid at all.

In an effort to get at the core of these compensation issues, HealthLeaders Media recently surveyed more than 300 industry leaders of varying stripes to gain insight into their approach to executive compensation and to determine whether these leaders thought that compensation models were aligned with organizational goals. The results were telling.

When organizations were asked what best describes their executive compensation strategy for both the financial and patient care objectives of healthcare now, 17% of the respondents for each objective reported that no change was needed. More than 50% of the respondents indicated that group or team incentives have been or are expected to be modified for executive compensation packages to address the perceived shift from volume to value, and 38% of respondents reported that executive compensation incentives were either slightly or seriously misaligned with organizational strategies.

While a significant number of respondents (61%) reported that their executive compensation programs are currently perfectly or pretty well aligned, the survey results could be an indication that fundamental changes are taking place. These changes not only affect how leaders are paid, but also impact what is expected of them, as the survey attempts to explore this issue as well.

At the end of the day, each organization will have to determine how to use executive compensation to achieve its mission. Obviously, that could lead to a number of acceptable and effective options provided they are carefully considered in light of the complexity of our environment and the culture we wish to create.