Tag Archives: Ontario Hospital Association

Is the OHA next to experience public wrath over executive bonuses?

It seems there are two choices with regards to executive compensation.

The first is to simply place executives on salary and expect them to do the job they get paid for. That’s how rank and file employees get paid.

The second is to divide compensation, setting out a certain amount as “base” salary, the rest as bonus based on established performance benchmarks.

The Local Health Integration Networks can also claw back a percentage of a hospital CEOs salary if the hospital fails to live up to the terms of its accountability agreement with the LHIN – not that we are aware of this ever taking place.

The LHINs themselves may be a bit gun-shy about using these powers given they themselves are struggling to meet their own performance targets. The Erie-St. Clair LHIN, for example, missed 11 of 14 performance targets for 2010-11.

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Some hospital CEOs get bonuses for “unambitious” and declining targets — report

The threshold for CEOs receiving pay-for-performance bonuses in Ontario hospitals can be very low. Today’s panel report commissioned by the Ontario Hospital Association suggests some hospital CEOs receive bonuses on targets that are set below existing performance levels.

In other words, a hospital’s performance can decline and the CEO can still get his or her bonus.

The report – put together by executives from the public and private sector – calls Ontario hospital CEO compensation reasonable at a median of $266,000 annually, but suggests there are inconsistencies particularly among mid-size hospitals.

During the last election the NDP had called for a cap on hospital CEO salaries at twice the salary of the Premier: $418,000 per year. The report indicates 25 per cent of Ontario hospital CEOs make more than twice the compensation of the Premier.

The report says hospital CEO salaries are slightly less than university presidents – its nearest comparator. They do not compare hospital CEOs to provincial deputy ministers, who have a compensation guideline of about $220,000 a year.

This spring the provincial budget called upon hospital CEOs to reduce their executive office budgets by 10 per cent over two years. However, as reported in this BLOG, the Ministry later clarified that this did not necessarily mean a reduction in executive salaries, that clerical and support staff could be laid off instead.

Did this occur? The report is coy in stating that “to date there have been no legislative provisions to support this action.”

The report puts hospital CEO salaries in the bottom 25 per cent of private sector executive salaries. They recommend private sector compensation be used as a future benchmark even though there is broad consensus that corporate executive salaries have been rising at an unsustainable rate. Last year average CEO compensation in Canada’s top 100 corporations rose an average of 13 per cent. Does that mean hospital CEOs should have a similar raise as long as they remain in the bottom 25 per cent?

The report also indicates that what we are seeing in the sunshine reports may not entirely reflect the whole story. For example, some CEOs receive a SERP – a supplemental employee retirement pension plan. Four Ontario hospital CEOs receive SERPs that are over and above contributions to HOOP – the Hospitals of Ontario Pension Plan. Others receive a SERP in lieu of HOOP. Public contributions to a SERP – which is fixed benefit plan – can range from below $50,000 to above $200,000 a year. Hospitals are not required to report SERPs as benefits in the sunshine list.

The report says total individual CEO compensation should be made public. The sunshine list can often distort the real story given CEOs can start or leave midway through a year, the reported compensation can contain retroactive or severance pay, and not all benefits are included (such as the SERPs).

While Ontario legislated a pay-for-performance component to CEO compensation, some hospitals have made it an insignificant amount – as low as 2 per cent. The report states: “hospitals that introduced pay-for-performance in response to Bill 46 have struggled to identify performance expectations and to introduce performance-based compensation while at the same time complying with a two-year salary freeze for non-union employees.” The report says a number of hospitals have set “unambitious quality improvement targets” as part of this scheme.

While hospital CEOs have long told rank and file staff to suck it up with regards to austerity, the report indicates that changes in compensation practices appear to have “hurt morale” and made it more difficult to attract qualified senior managers.

Yet the background of existing CEOs suggests that only 40 per cent had previous experience as a CEO, most coming up the ranks. Only 47 per cent of hospital CEOs have clinical education credentials and just one has a PhD in management education. Slightly more than half – 55 per cent – have a master’s degree in management education.

Other recommendations from the panel include the use of a standard hospital executive compensation framework and template, pay-for-performance bonuses set at between 10-30 per cent of base compensation, standardized severance agreements, and enhanced training for boards in executive compensation issues.

The panel believes that CEO compensation should still rest with the hospital boards.

Lack of civility as opinions differ

This week OHA CEO Tom Closson wrote to a number of groups opposing the recent “hospital secrecy law” (Schedule 15 of Bill 173) that will allow the Ontario Hospitals to shield specific quality information from the public.

Given Schedule 15 had alredy been amended — presumably to the OHA’s approval — it is questionable as to the purpose of Closson’s sudden enthusiasm for letter writing. The actual amendment passed at the legislature’s finance and economic affairs committee Thursday morning.

What is most surprising from Closson’s letter-writing is his accusations that public interest groups were attempting to “grossly mislead” the public about the meaning of the Bill. The letters, all posted the OHA’s website, manage to insult the community organizations in a way we haven’t quite seen before.

He says Cybil Sack (Impatient4Change) “took significant liberties with the facts…while also making derogatory comments about hospitals, their leaders, and the professionals who work in them.” He further writes “it is apparent from your note that you believe the people who work in hospitals spend their days devising new ways to stifle public debate.”

To many of the organizations – including the Ontario Health Coalition, the Registered Nurses Association and the Service Employees International Union, he says he is writing to “rebut the grossly inaccurate claims.” He finishes all the letters with “on an issue as important as Ontarians’ health and safety, the “facts optional” approach your organization has taken to date is simply irresponsible. Ontarians deserve better.”

If these submissions were full of factual errors and misleading commentary, one might understand. Closson’s rebuttals fail to point out much in the way of factual error, but instead revisits the OHA’s original argumentation around the need for the schedule and takes issue with some of the intervenor’s interpretation of the role of the Quality of Care Information Act.

To suggest on this basis that anybody is trying to “grossly mislead” is a bit much. It also calls into question the OHA’s attitude towards public engagement.

By any interpretation, the government has opened the door to hospital transparency, and closed it to a degree with this amendment to the Freedom of Information and Protection of Privacy legislation. That’s a fact.

Closson is not the only one getting in on the act of incivility.

Georgina Thompson, Chair of the South East LHIN, recently told the media that prior to the LHIN’s recent Road Map plan, hospitals “talked to each other but they didn’t play together in the sandbox well.”

We could be wrong, but some hospitals may take umbrage to their characterization as children who got straightened out by the LHIN.

It’s been a long cold and wet spring. Here’s hoping that with a bit of better weather we can all go back to debating health care policy without this kind of nasty rancour.

Oh, and Tom – no need to reply.

Hospital secrecy – changes to Budget Bill fail to protect public interest

The latest amendment to Ontario’s Budget Bill 173 fails to address concerns raised around a change to freedom of information legislation that will permit greater hospital secrecy.

Schedule 15 of Bill 173 enables a hospital CEO to shield from public scrutiny any information about quality of care produced for or by a hospital committee. More than a dozen groups appeared before the legislature’s Standing Committee on Financial and Economic Affairs in April asking the offending schedule be removed.

Instead the McGuinty government has amended the proposed Bill to exempt “information provided in confidence to, or records prepared with the expectation of confidentiality by, a hospital committee to assess or evaluate the quality of healthcare and directly related programs and services provided by a hospital, if the assessment or evaluation is for the purpose of improving that care and the programs and services.”

Ontario hospitals are the last in Canada to come under Freedom of Information legislation. After introducing a public sector accountability bill last fall that would open up hospitals to freedom of information requests beginning January 2012, the McGuinty government recently caved-in to a lobby by the Ontario Hospital Association, the Ontario Medical Association and a private insurance company to narrow what would be accessible.

“The government’s amendment allows hospital executives to make some documents secret by simply stamping ‘confidential’ on them or retroactively suggesting that the records were intended to be private,” says Cybele Sack of Impatient for Change, a patient advocacy group. “Our freedom of information laws are meant to increase transparency and this amendment undermines that spirit.”

The final act is expected to be passed by the majority Liberal government this Thursday (May 5).