The Ontario Hospital Association (OHA) has introduced a proposed hospital executive compensation framework and associated recommendations intended to strengthen hospitals' executive compensation programs and improve their transparency.
The OHA is recommending hospital boards:
•voluntarily implement the framework, which would see hospital CEO compensation based on a complexity matrix that includes budget size, research and teaching intensity, patient volumes and other factors
•voluntarily implement a pay-for-performance scheme that would see up to 30 per cent of hospital executive compensation tied directly to clearly and publicly articulated provincial and organizational goals
•voluntarily extend executives' compensation freeze to a total of five consecutive years, inclusive of the current freeze period — if fully implemented, this freeze would save about $47 million over five years
•review organizational policies regarding car allowances to ensure they are consistent with the spirit and letter of the Broader Public Sector Accountability Act's perquisites directive, and ensure that without-cause severance arrangements adhere to common law principles.
"Ontario's hospital boards and executives have been integral to making our hospitals, through the outstanding work of all employees and staff associated with hospitals, the most efficient in Canada, and making our wait times and patient outcomes some of the best anywhere," said Mark Rochon, interim CEO of the OHA.
"Today, OHA member hospitals are taking a leadership role among the entire broader public sector in ensuring that their executive compensation practices are evidence-based and transparent. We believe this can only enhance public confidence in the leadership of Ontario's hospitals."
In December 2011, an independent expert panel on executive compensation in the hospital sector chaired by former deputy prime minister of Canada John Manley, made a number of recommendations aimed at helping hospital board of directors ensure their decisions regarding executive compensation were replicable across the sector, and based on evidence and leading human resources practices.
"The framework and associated recommendations were based on the panel's work," said Rochon. "They were also shaped by Ontario's current economic climate and Premier McGuinty's call for leadership by Ontario's broader public sector leaders."
The OHA also recommended the government of Ontario review specific perquisites, including supplementary executive retirement plans (SERPs) and retention bonuses, across all broader public sector organizations to determine their appropriateness in today's economic climate.
"Premier McGuinty and others have repeatedly called on all Ontarians to play a role in addressing the province's economic challenges while protecting important public services," said Rochon. "Ontario's hospital leaders are doing their part."
More details on the framework and recommendations can be found at: Ontario Hospital Association.
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