Balancing incentives in the compensation contracts of nonprofit hospital CEOs

Preyra, Colin; Pink, George H.

doi:10.1016/s0167-6296(01)00077-7

Cited by 68 publications

(73 citation statements)

References 21 publications

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“…After controlling for CEO personal characteristics such as education, experience, and gender, and hospital characteristics including organizational size, teaching status, and chain membership, these authors found no difference in pay for CEOs working in those three types of hospitals. As in these first two studies, Preyra and Pink (2001) also adopted a cross-sectional approach but compared hospital CEO pay to that of industrial CEOs in Ontario, Canada. They found that Ontario's hospital CEOs were being rewarded for financial performance.…”

Section: Previous Studies On Hospital Ceo Performance and Paymentioning

confidence: 99%

Not-for-Profit Hospital CEO Performance and Pay: Some Evidence from Connecticut

Kramer¹,

Santerre²

2010

INQUIRY

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This paper uses observations from a panel data set of 35 chief executive officers (CEOs) from 29 not-for-profit hospitals in Connecticut over the period 1998 to 2006 to investigate the relationship between CEO performance and pay. Both economic and charity performance measures are specified in the empirical model. The multiple regression results reveal that not-for-profit hospital CEOs, at least in Connecticut, are driven at the margin to increase the occupancy rate of privately insured patients at the expense of uncompensated care and public-pay patients. This type of behavior on the part of not-for-profit hospital CEOs calls into question the desirability of allowing these hospitals a tax exemption on earned income, property, and purchases.Executive compensation has always captured a considerable amount of attention from the media and general public. The attention surrounding these compensation issues was particularly exacerbated last year as both legislators and the public seriously questioned the huge bonuses many major corporations paid their chief executive officers (CEOs) while being bailed out by the federal government. It has always been unclear, however, whether these concerns over CEO compensation have been driven by valid interests in economic efficiency, subjective notions of fairness, or a simple collective matter of envy. Regardless of the specific reason, we know that CEOs are paid much more than the typical worker and this gap continues to grow in both absolute and relative terms. Determining what should be done about this lopsided imbalance continues to pose a daunting problem for both society and regulators.

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Section: Previous Studies On Hospital Ceo Performance and Paymentioning

confidence: 99%

Not-for-Profit Hospital CEO Performance and Pay: Some Evidence from Connecticut

Kramer¹,

Santerre²

2010

INQUIRY

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“…Among other things they find for-profits tend to use compensation schemes with 'bonuses rather than base salaries' when compared to their NPO counterparts. Another recent empirical study is by Preyra and Pink (2001) who argue that NPO hospital compensation schemes may well be preferred to their profit-maximizing counterparts. They find for-profit compensation schemes tend to place too much emphasis on the financial aspects of hospitals and not enough on other less tangible (but essential) management responsibilities.…”

Section: Introductionmentioning

confidence: 99%

The strategic use of managerial incentives in a non‐profit firm mixed duopoly

Goering

2007

Manage Decis Econ

109

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A mixed duopoly setting is examined where a private non-profit firm (NPO) competes with a private profit-maximizer. The NPO's stakeholders select a contract for their managers. A novel NPO objective function is utilized which takes into account all the likely returns to the NPO's stakeholders (NPO profits and the surplus accruing to the NPO stakeholders) in such a commercial setting. In sub-game perfect equilibria, it is shown that the NPO's managers generally will not be given the NPO's true objective to optimize. It is also shown that aggregate social welfare may increase or decrease due to this managerial contracting behavior or the use of NPO membership fees. Copyright © 2007 John Wiley & Sons, Ltd.

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“…Pink and Leatt (1991) studied hospitals in Ontario using cross-sectional data. Preyra and Pink (2001) found that hospital CEOs in publicly traded firms earn "twice as much, on average, as those in similarly sized nonprofit hospitals." Table 4.…”

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confidence: 99%

Does Managed Care Change the Management of Nonprofit Hospitals? Evidence from the Executive Labor Market

Bertrand¹,

Hallock²,

Arnould³

2005

ILR Review

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This paper examines how the managerial labor market in nonprofit hospitals has adjusted to the financial pressures induced by HMO penetration. Using a panel of about 1,500 nonprofit hospitals over the period 1992–96, the authors find that top executive turnover increased following an increase in HMO penetration. Moreover, the increase in turnover was concentrated among the hospitals that had lower levels of economic profitability. While the link between top executive pay and for-profit performance measures was on average very weak, HMO penetration tightened that link: as HMO penetration increased, top executives were compensated more for improving the profitability of their hospitals. These results, while of limited economic magnitude, are qualitatively consistent with the view that HMO penetration has increased the weight assigned to for-profit performance in the management of not-for-profit hospitals.

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Balancing incentives in the compensation contracts of nonprofit hospital CEOs

Cited by 68 publications

References 21 publications

Not-for-Profit Hospital CEO Performance and Pay: Some Evidence from Connecticut

Not-for-Profit Hospital CEO Performance and Pay: Some Evidence from Connecticut

The strategic use of managerial incentives in a non‐profit firm mixed duopoly

Does Managed Care Change the Management of Nonprofit Hospitals? Evidence from the Executive Labor Market

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