Health care executive compensation rebounded in 2021

Rates of salary and incentive increases are up as pandemic’s effects ease

After registering modest gains in 2020, health care executives saw their cash compensation increases return to pre-pandemic levels in 2021, according to the latest salary and executive compensation survey by health care consulting firm SullivanCotter.

Median base salaries for health care executives increased by 4.5% in 2021, up from 2% in 2020, according to a company spokeswoman. When incentive payments were included, 2021 median total cash compensation grew by 9.7%.

In a news release, the company said the lower salary increases reported for 2020 were due to health care organizations freezing executive salaries due to the onset of the COVID-19 pandemic. But salaries rebounded in 2021 due to “successful business recovery efforts” and demand for executives outpacing supply because of burnout, pandemic-induced retirements and a need for leaders able to steer organizations through “increasingly complex times.“

The pandemic’s impact on health care organizations’ bottom lines resulted in 2020 incentive payouts for executives that were below historical levels. Median total cash compensation for the year grew by 0.8%. But in 2021 “performance returned to levels consistent with historical practices as financial and operating performance within the industry improved,” the company said.

“The growth in reported total cash compensation is being driven by higher incentive awards that reflect improved organizational performance after a particularly challenging year,” SullivanCotter managing director Bruce Greenblatt said in the news release. “Thus, it shows that the performance-based incentive programs are operating as designed by tempering awards in challenging years and increasing them when performance improves.”

Looking to 2023, the company said that executive salary increases probably will need to exceed recent norms of 3% “in order to retain key talent, mitigate inflation effects, and address issues of pay equity.”

Now in its 30th year, SullivanCotter’s Health Care Management and Executive Compensation Survey includes compensation data for positions in approximately 3,000 health care organizations representing more than 42,000 executives and managers.