Hospitals and health systems are vying for top executive talent to lead through operational challenges and strategy shifts, while also investing in developing talent internally.
Healthcare organizations are spending more on executive compensation, zeroing in on complex skill sets and working to keep turnover rates low.
Many organizations saw financial improvement over the past year, but volatile market conditions and more than $1 trillion in upcoming cuts to federal healthcare funding are ushering in new challenges for leaders—and highlighting the need for top-notch expertise in 2025 and beyond.
1. Total cash compensation is rising.
Total cash compensation, which includes base salaries and annual incentives, grew 7% at hospitals and health systems in this year’s survey, an increase from 6.5% in the previous year. Median base salaries rose 4.4%, compared with 3.8% a year ago.
2. Operational and strategic roles are more important than ever.
“There is less margin for error,” said Alexander Yaffe, managing director at Pearl Meyer. “The sense among my clients is, even if they’re financially healthy, who knows what’s coming down the pike, and we need to be on top of our game.”
Higher demand often translates into higher compensation to attract needed talent.
For example, median base salaries for chief operating officers at health systems rose 11%, while median total compensation increased 13%. The largest systems—those with annual revenue above $3 billion—saw the biggest jump in COO median total compensation, at 21%.
Median base salaries for chief strategy officers grew 8% at health systems, while total compensation grew 13%.
3. Executive turnover remains a challenge.
Executive turnover is driven by several factors, including financial pressures leading to administrative cuts, structural changes from mergers, competing compensation offers and retirements, according to consultants.
The mismatch between executive talent supply and demand is also driving up compensation, making it harder to attract and retain leaders.
High turnover slows an organization’s momentum in implementing strategies, so organizations are trying to improve compensation packages and delve into succession planning to combat the negative effects, Yaffe said.
4. Executive positions are becoming more complex.
Organizations need more from their leaders than financial skills alone...
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