Survey Examines Role of Incentives in C-suite Compensation Increases
AMGA 2017 Medical Group Executive Compensation Survey Reveals Trends
Alexandria, VA – AMGA today announced the release of the AMGA 2017 Medical Group Executive and Leadership Compensation Survey. The survey results indicate material increases in overall cash compensation for several C-suite executive positions over the prior year. The survey also found that incentive compensation plays an important role in these increases.
Results show national median total cash compensation for CEO (physician) increased by 7.5%; CEO (non-physician) by 11.1%; and COO by 7.2%. Several of the other traditional C-suite positions saw increases of up to 4.4% at median. Some of the larger increases may be driven, in part, by differences in the demographics of survey participants year-over-year. However, the general upward trend is consistent with other compensation survey data.
The survey results suggest that incentive compensation continues to play an ever-more-important role for leaders. Analysis of executive roles indicated that the median “earned bonus-to-base ratio,” a measure of the proportion of compensation driven by performance incentives beyond base salary, increased for several executive roles over 2016. The table below illustrates the differences for a select sample of these positions:
Median Earned Bonus to Base Ratio
Position | 2017 Ratio | 2016 Ratio |
CEO: Physician | 22.7% | 18.2% |
CEO: Non-Physician | 24.9% | 20.0% |
CFO | 19.6% | 15.7% |
COO | 21.9% | 15.0% |
“At this time, value-based care is driving executive compensation incentives in a manner similar to physician compensation for many groups,” said Fred Horton, president of AMGA Consulting.
Wayne Hartley, COO of AMGA Consulting, added, “As we work in the field with medical group executives, we commonly hear that there is a renewed focus on operations. Many resources have gone into payer strategy and care model design in recent years and now organizations are focused on orchestrating those investments to achieve the desired outcomes.”
Consistent with this move to value-based care, one role that is key to these efforts is director, care coordination, which registered a more than 14% increase in median total cash compensation year-over-year.
This year’s survey includes data from 55 medical groups across the country, representing more than 1,300 incumbents. Approximately 63% of incumbents are from system-affiliated groups, while 37% represent independent groups. The survey is weighted towards mid- to large-size groups, with 73% of incumbents from groups of more than 100 full-time equivalent (FTE) physicians.
The survey also shows an increase in the prevalence of Supplemental Executive Retirement Plans (SERPs), a common tool to promote retention of key executives. The change for the same four C-suite positions referenced earlier are shown here:
Supplemental Executive Retirement Plan (SERP) Prevalence
Position | 2017 | 2016 |
CEO: Physician | 62% | 41% |
CEO: Non-Physician | 50% | 31% |
CFO | 47% | 39% |
COO | 33% | 29% |
“With the effort required to align resources for success under value-based care, it may be that more organizations are deciding that incentives to promote consistency in the leadership team are key to success,” added Horton. “Alternatively, as SERPs tend to be more common in larger organizations, it may be that continued consolidation into larger systems is driving this benefit. Either way, there is high demand for talented executives, and vacancies in senior positions can impact organizational momentum during a challenging time for the industry.”
About AMGA Consulting
AMGA Consulting is an independent professional services firm that provides consulting and advisory services to multispecialty medical groups and integrated health systems across the United States. AMGA consultants bring real world experience from the front lines of health care, specializing in physician and provider compensation services, Fair Market Value (FMV) reviews, operational performance management, revenue cycle performance, strategy and organizational development.
About AMGA
AMGA is a trade association leading the transformation of health care in America. Representing multispecialty medical groups and integrated systems of care, we advocate, educate, innovate and empower our members to deliver the next level of high performance health. AMGA is the national voice promoting awareness of medical groups’ recognized excellence in the delivery of coordinated, high-quality, cost-effective care. More than 175,000 physicians practice in our member organizations, delivering care to one in three Americans.
Limited copies of the survey are available for working press. For press copies, contact Angela Sidlauskas at mclarke@amga.org.