Many of the largest, publicly traded health companies have directly tied top executive pay to quality-of-care measures. Until recently, financials alone determined incentives for most for-profit hospital CEOs. But as insurers and employers demand more transparency and more accountability for quality of care, hospitals are increasingly competing on patient outcomes and safety. Quality pay incentives for CEOs are a very visible way for systems to publicly demonstrate their commitment.

Some examples: Tenet Healthcare, which operates 77 hospitals, gives out 25 percent of its top executives’ annual cash based on quality. HCA, which operates 165 hospitals, includes quality as a 15 percent measure of the company’s annual cash incentive award for its president and CEO. The CEO of Lifepoint Hospitals, which operates 61 facilities, receives 25 percent of his annual payout based on quality measures. And Community Health Systems, which operates 208 hospitals, includes quality measures tied to performance improvements in its compensation decisions.

The bottom line? Linking executive pay to quality metrics improves hospital performance, a conclusion confirmed by research and by real world facts. That’s good business for the health care sector, and great news for patients.

I’m John Howell for 3BL Media.

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