OVERVIEW >>In 2014, the healthcare industry is changing – arguably more than any other industry in the United States. As the

Affordable Care Act unfolds, nearly every aspect of the healthcare sector, from payers to hospitals to employers to

patients, are beginning to alter how they go about consuming, providing and paying for healthcare.

Amid these seismic changes, the business of healthcare must go on, and health executives are attempting to adapt

their companies’ workforces to the changes. What will healthcare staffing look like in 2014? Who will be leading

health organizations during this time of change, and where will most industry turnover occur? This study, based on a

survey of C-level health executives, helps answer these questions.

This survey of top health leaders also helps forecast the industry’s executive compensation trends. Though much of

the recent discussion has focused on physician compensation, changes are on the horizon in C-suite compensation

as well, including an impending slowdown in pay increases – at least, from the view of the corner office.

HEALTHCARE LEADERS SURVEY:

2014 Forecast on Staffing and Executive Compensation

THE FUTURE OF HEALTHCARE LEADERSHIPWhen asked which industries could feed the next generation of

healthcare leadership, health executives chose finance as the

top getter (92%), followed by the hospitality (55%), investment

(40%) and pharmaceutical (33%) sectors. The manufacturing,

information technology, and retail/supply chain industries

received mentions as well.

Regardless of where outside leadership comes from, health

executives are cautious that non-health-experienced CEOs can

be more effective than a healthcare industry veteran. A large

majority (59%) of respondents said an outsider would be

“somewhat effective” as a CEO, but less so than someone with

healthcare experience. Fewer (17%) thought a hospital CEO hired

from another industry would be equally effective as someone

with healthcare experience and only 9% thought an outsider

would be more effective.

WORKFORCE CHANGES IN 2014As the healthcare industry undergoes significant change in 2014,

most health executives expect staffing levels at their companies

to shift. More executives expect their company’s total workforce

to decrease (44%) than increase (39%), while 16% anticipate

their staffing levels to remain unchanged in 2014. However, mass

hirings or layoffs are not expected – of those health organizations

that plan to hire, 27% expect to augment their staff levels by up to

10%, vs. 12% that expect to augment their staff by 11% to 30%.

Likewise, of those that plan to reduce staff, 33% will do so by up

to 10%, and only 10% will do so by 11% to 30%.

Where will most of these staffing changes occur? With a glut of

new regulations and requirements in the way hospitals manage

their care, information and finances, it’s no surprise that in 2014,

hospital executives expect the greatest change in staffing to occur

in the care management (42%), information management (41%),

and clinical management (34%) departments. As interoperability

between these three functions becomes more important to the

financial health of hospitals and health systems, employers must

ensure they have “the right people on the bus” in those areas.

And while senior management appears lower on the list, a 9%

turnover rate in the C-suite is significant: That means almost 1 in

10 C-level executives will change personnel in 2014.

What functions do you anticipate seeing the greatest change in total headcount from 2013 to 2014? Note: Multiple responses permitted

Care ManagementInformation Management

Clinical ManagementOperations Management

General Administrationinancial Management

Human ResourcesSenior Management

Materials MangementMedical Imaging Management

42% 41% 34% 26% 24% 17% 14% 9% 8% 7%

What do you anticipate the average change (in terms of number of employees) will be between 2013 and 2014 for the size of your company’s total workforce overall?

>30% 11%-30% 1%-10% Stay the

same

1%-10% 11%-30% >30% No opinionDecrease Increase

27%

16%

33%

10%

1% 0%

12%

1%

How would you rate the effectiveness of a hospital CEO hired from another industry?

Somewhat effective, but less than someone with healthcare experience

Equally effective as someone with healthcare experience

No opinion

More effective than someone with healthcare experience

Not effective at all

59%

17%

10%

9%

5%

Assuming industry consolidation occurs, please select the TOP 3 industries which you think will feed the next generation of healthcare leadership? Note: Multiple responses permitted

Pharma

33%

Investment

40%

Other*

31%

Hospitality

55%

Finance

92%

*Other includes IT, Manufacturing & Retail

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EXECUTIVE COMPENSATION: STILL GROWING, BUT AT A SLOWER RATEMuch of the discussion in health employment compensation has focused

on physicians, due to drastic changes in payment levels and models from

the Affordable Care Act. But changes in executive compensation are also

on the horizon. Most health executives see incremental increases in their

total compensation each year, including base salaries and bonuses, with

the majority – 39% – reporting a 1% to 5% increase in 2013 over 2012.

However, fewer are expecting their total compensation to increase in the

coming year. In 2013, 57% saw a bump in their base salary, but only 53%

are expecting an increase in 2014. Likewise, 33% of health executives

saw a boost in their last bonus payout, but only 28% expect an increase

in their next bonus payment. Health executive compensation is still

growing, for sure, but at a slower rate than in the past.

When it comes to long-term incentives, almost 4 in 5 healthcare leaders

are not eligible for such an award. With the upcoming changes in hospital

performance measurement, however, this paradigm is likely to shift.

How do you expect your total compensation for 2013 to compare to 2012?

>20% 11%-20% 6%-10% 1%-5% Stay the

same

1%-5% 6%-10% 11%-20% >20% No opinionDecrease Increase

39%34%

6%7%

2% 2%2%6%

1%2%

Almost 4 in 5 healthcare leaders are not eligible for a long-term incentive award.

79% Not eligible for long-term incentive award

Eligible for long-term incentive award21%

Most executives are seeing a pay increase, albeit at a slower rate than past years.

What was your change in annual incentive payout between the following years?

2012 vs. 2011

33%

29% 12%

26%Increased

No Change

Decreased

Did not receive

an award

2013 (projected) vs. 2012

28%

29% 17%

23%

4%

No Opinion

Increase

No ChangeDecrease

Do not expect to

receive an award

What was your change in base salary between the following years?

2013 vs. 2012

57%

39%

4%

Increased

No Change

Decreased

2014 (projected) vs. 2013

38%53%

6%3%

No Opinion

Increase

No Change

Decrease

RESPONDENTS PROFILE: WHO TOOK THIS SURVEY?

Respondents by Title

5%

17%

21%

6%22%

15%

6%

7%2%

Information Management (CIO, CTO)

Financial Mangement (CFO, V.P./Director of

Finance, Etc.)

Operations Management (COO, Exec, V.P,

Business Manager)

Senior Management(CEO, President, Administrator)

Other (Board Member, Attorney, Etc.)

Case Management (Risk Manager, Etc.)

General Administration

(HR, Marketing, Facilities Engineering, Etc.)

Materials Management (CPO, Director/V.P. of

Materials Management)

Clinical Management (CMO, CMIO, Chief of Staff, Etc.)

Respondents by Type of Institution

Hospital (Children’s, General/Acute,

Mult-Hospital System, Long-Term Care, Etc.)

Medical Clinics/Groups and Nursing Homes (Academic Medical Center,

Nursing Homes, Etc.)

Payers

Others Allied to the Field

33%

2%

54%

11%

72% of respondents hold a C-suite title

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For More InformationJulia Gierjgier@fpladvisorygroup.com

About FPL Advisory Group FPL Advisory Group (FPL) (www.fpladvisorygroup.com) is a global professional services firm that

specializes in executive search, compensation and management consulting solutions across the

healthcare, real estate, financial, and hospitality sectors. FPL is comprised of two primary operating

companies that work together to serve a common client base. Ferguson Partners Ltd. provides executive

and director recruitment services. FPL Associates provides a range of specialized compensation and

management consulting services. FPL is headquartered in Chicago, with offices in Boston, New York, San

Francisco, Toronto, London, Hong Kong, Singapore and Tokyo.

About Modern Healthcare Custom MediaModern Healthcare Custom Media’s (www.modernhealthcare.com) dedicated team of writers and

researchers develops custom content solutions designed to educate and engage readers. These custom

content solutions provide in-depth information on a specific trend, topic or solution that is top-of-mind for

healthcare executives.

About the Survey This briefing summarizes the results of a custom research survey conducted by Modern Healthcare

Custom Media on behalf of FPL Advisory Group. The purpose of the research is to gather forecasting

information concerning healthcare employment trends in 2014, including recruitment and

executive compensation.

Invitations to participate in a web-based survey were sent via email to 11,707 healthcare executives on

October 16, 2013, and October 29, 2013. The survey was open for 22 days. As an incentive to complete

the survey, respondents were offered a chance to win a $500 American Express gift card.

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