Approach to CEO Compensation
Washington Township Health Care District Approach to CEO Compensation
Last year the Washington Hospital Health Care System (WHHS) faced unprecedented challenges largely due to the implementation of the Affordable Care Act and the difficult economy. We were not alone. Hospitals and health care systems across the country experienced a dramatic reduction in reimbursements.
Notwithstanding these challenges, the CEO made significant progress to enhance services and to preserve WHHS’ ability to deliver quality health care to its residents and patients. These achievements are key performance measures in setting the compensation of the CEO, Nancy Farber.
o In 2013, Nancy Farber was instrumental in establishing a formal relationship between WHHS and UCSF. Through this affiliation, both local residents and physicians will have access to this world-renowned academic medical center.
o WHHS successfully implemented the EPIC Electronic Health Record System, which positions the Hospital well for the future.
o The award-winning and internationally recognized Institute for Joint Restoration and Research, in the first year of operations in its new building, continues to serve patients from the broader Bay Area and the world.
o Washington Hospital just recently completed Phase I of the Facility Master Plan and will begin the largest construction project in the history of the District in 2014, with the groundbreaking for the Morris Hyman Critical Care Pavilion which marks the beginning of Phase 2 of the Hospital’s Facility Master Plan.
o In 2013, US News & World Report recognized Washington Hospital as the fourth best hospital in the San Francisco market.
Hospital and healthcare system CEOs face unique challenges and their pay reflects the complexity of the job. At WHHS, the CEO oversees all healthcare system operations which run 24 hours a day, seven days a week. Regardless of the challenges created by the Affordable Care Act, our hospital and healthcare system is vital to meeting the health care needs of the community by providing a wide range of acute care and diagnostic services, supporting public health needs and offering a myriad of other community services to promote the health and well-being of the community.
WHHS receives no taxpayer or government financial support to cover its operations, aside from local voter-approved funds dedicated only to capital improvement projects. So, when reimbursements are reduced, whether from government payors (i.e. Medicare) or from private payors (i.e. insurance companies), the CEO must find a way to address reduced reimbursements while still making sure that WHHS provides exceptional quality of care for its patient and needed services for its residents.
During the public hearing held in December, Dr. Bernard Stewart, President of the District’s Board of Directors made special note of the establishment of the relationship with UCSF. Dr. Stewart noted this is a singularly historic achievement. UCSF is a world renowned Academic Medical Center. By virtue of this affiliation, WHHS opened the door to access to UCSF, both for its patients and its physicians. While this was a team effort, there is no doubt that the idea to pursue this affiliation and the realization of this affiliation was largely due to the efforts of Nancy Farber.
In addition to considering the CEO’s performance and accomplishments, annually, the Board retains an independent national compensation consulting firm, Integrated Healthcare Strategies to provide a report showing the compensation ranges for CEOs operating comparable hospitals and healthcare systems. This report together with a review of the CEO’s performance and achievements is then considered by the Board of Directors in determining fair adjustments to compensation and any incentive award.
This year, at its January 8, 2014 meeting, the Board voted to award the CEO a four percent base salary increase and a 25 percent of the base salary "at risk" compensation award. The vote was unanimous.
In 2012, Nancy Farber elected to forgo any consideration of an increase to her base salary in recognition of the management salary freeze that was in place.