Governance in non-for-profit hospitals: Effects of board members’ remuneration and expertise on CEO compensation

Executive compensation in health care

“…Outside the United States, results obtained by Schraa (2007) suggest that, in Ontario, hospitals specializing in chronic care and hospitals with a higher percentage of tertiary care were associated with higher CEO compensation. In the Netherlands, Cardinaels (2009) found that executives at top-rated clinical institutions earned higher pay compared with CEOs at general hospitals, although the statistical significance of this finding varied among study models. For systemmember hospitals in the United States, Tillman (2009) and Eichmann and Santerre (2011) found no significant relationships between a hospital's executive compensation and its status as a member of a hospital system.…”

“…Furthermore, it is interesting to consider that Ballou and Weisbrod (2003) found a statistically significant, negative relationship between CEOs' bonus payment and their having occupied that position the previous year (i.e., ''incumbent''), although they found the relationship between a CEO's salary and his or her status as an incumbent to be statistically insignificant. In the Netherlands, Cardinaels (2009) found that new CEOs could expect to earn generally lower levels of pay (this relationship lacked statistical significance in some models), whereas ad interim (or shortterm, ''turn-around'') managers were consistently associated with significantly higher compensation levels. Weil and Kimball (1996) also incorporated a number of unique human capital variables that were not observed in other studies.…”

“…In the Netherlands, Cardinaels (2009) identified financial performance as positively related to CEO compensation at Dutch hospitals, although in only one of the study's models was financial performance observed as a determinant at the 5% level of significance. An important observation across each of these studies is the varied measures employed for organizational financial performance, including measures relating to profit or operating margins (Bertrand et al, 2005;Eldenburg & Krishnan, 2003;Kramer & Santerre, 2010;Moskowitz, 1999), net or residual income (Pink & Leatt, 1991;Preyra & Pink, 2001;Stahl, 2000), revenue growth (Aggarwal et al, 2012;Cardinaels, 2009), return on assets or equity (Bertrand et al, 2005;Brickley & Van Horn, 2002;Brickley, Van Horn, & Wedig, 2010;Sigler, 2003), occupancy rate (Kramer & Santerre, 2010;Oster, 1998), change in yield (Aggarwal et al, 2012), and categorical measures of financial performance (Ballou & Weisbrod, 2003;Moskowitz, 1999;Reiter et al, 2009). Organizational size.…”

“…Numerous studies sought to measure the difficulty of an executive's position as a possible determinant of his or her compensation, yet our review suggests that these measures and their results vary across studies. Measures employed as proxies for the complexity of an executive's responsibilities include a hospital's teaching status (Pink & Leatt, 1991;Santerre & Thomas, 1993), the number of ''job points'' assigned by a Hay Consultants evaluation system (Ballou & Weisbrod, 2003;Roomkin & Weisbrod, 1999), the ratio of assets to employees (Preyra & Pink, 2001), the number of services offered (Eldenburg & Krishnan, 2003), the ratio of major procedures to full-time employees (Kramer & Santerre, 2010), the number of specializations offered (Cardinaels, 2009), and a hospital's average case mix index (Brickley et al, 2010). Of these measures, case mix index (Brickley et al, 2010) and number of services per employee (Kramer & Santerre, 2010) were positively associated with executive compensation at statistically significant levels, whereas the ratio of assets to employees held a significant, negative relationship to executive compensation (Preyra & Pink, 2001).…”

Cost (In)Efficiency and Institutional Pressures in Nursing Home Chains

“…We take a step in this direction by documenting a negative influence of chain affiliation on cost efficiency in the French context. Our empirical evidence also provides valuable insights for policy-makers, nursing home administrators, and academics in Europe who are considering current and future ownership structures in the LTC sector (Cardinaels, 2009). …”