The federal government will put up $27-billion this year through the Canada Health Transfer. By 2017, when the deal ends, the annual transfer will have grown to $36-billion.Chad Hipolito
Many hospitals in Ontario have been forced to cut salaries for their top executives to comply with new rules on improving patient care.
The pay packets of hospital executives are now linked to their progress in meeting quality-of-care targets, ranging from improving hand hygiene to freeing up beds by discharging patients earlier in the day. A portion of their compensation can be clawed back if the executives fail to meet the targets.
But complying with the legislation, which took effect last April 1, has been much more challenging for hospitals that did not have pay-for-performance compensation plans. With a salary freeze in place for non-unionized public-sector workers, boards of directors at these hospitals had no choice but to cut salaries.
The money has been allocated for performance-based pay. The accountability legislation, known as the Excellent Care for All Act, does not stipulate how much of an executive's pay should be tied to meeting the targets. As a result, practices vary widely.
Salaries have been cut anywhere from 2 per cent to 10 per cent, according to a review of 25 hospitals by The Globe and Mail. Some hospitals, notably St. Joseph's Healthcare, welcomed the legislation to help improve front-line health care.
The Hamilton teaching hospital cut the salaries of CEO David Higgins as well as other executives by 10 per cent. Still, Dr. Higgins ranks among the highest-paid hospital CEOs in Ontario, with a salary of $500,000.
"We thought this was a great opportunity to cement the quality improvement plan that we already had in place," said Ben Gould, chairman of the board of directors. "This just gave an added kick."
Smaller, regional hospitals have not been as ambitious. They have cut salaries by just 2 per cent. One of them, Bluewater Health in Sarnia, set such a low rate because this is the first time the hospital has offered pay tied to performance, said board chairman Bruce Davies. But he said it might not be a bad thing that percentages vary considerably by hospital.
"I definitely think it should not be a one size fits all," he said. "There's always a tension between doing something that makes sense in your individual circumstances and trying to have a consistent approach [across]the sector. Whether the balance was exactly right, I think that's for somebody else to answer."
Health Minister Deb Matthews said the government left it up to the sector to set performance pay scales because some hospitals are just beginning to focus on improving quality while others are "way ahead on this."
For hospitals with incentive-pay systems already in place, including the largest ones in Toronto, all they had to do to comply with the legislation was allocate a portion of the bonus pool to their quality-improvement plans.
At University Health Network, for instance, 7.5 per cent of CEO Bob Bell's performance pay is tied to the hospital's quality-improvement plan. Dr. Bell earns a salary of $580,000 and a bonus equal to 30 per cent of his base pay, ranking him the province's highest-paid hospital CEO, according to his employment contract released this week.
St. Michael's Hospital CEO Robert Howard can earn variable pay equal to 5 per cent of his salary of $450,000, according to his employment contract. He also receives a lump-sum payment equal to 17 per cent of his salary.
Cambridge Memorial Hospital has also had an incentive plan in place for years. Its chief executive officer, Patrick Gaskin, can earn a bonus of 20 per cent on top of his base salary of $285,000, depending on his performance. A quarter of that bonus is related to the quality-improvement plan.
Last year, Mr. Gaskin didn't receive his full 20-per-cent bonus, but board chairman Chuck Phillips said directors were very satisfied with his work, which included reducing the hospital's deficit.
"The nice thing about the performance pay is that it's focused on specific, measurable activities, which are in some respects over and above the day-to-day responsibilities," he said.