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By Carson Kolb
When two healthcare organizations merge, boards and search committees typically turn to published compensation surveys for guidance. They pull data from MGMA, SullivanCotter, or other reputable sources, find the median for a particular role, and feel confident they've established a fair, market-based offer. Yet six months into the integration, they're facing retention issues with key leaders or struggling to attract the caliber of talent needed to execute their consolidation strategy.
The problem isn't with the benchmarks themselves—it's with applying standardized data to non-standardized situations. Healthcare consolidation creates unique organizational complexities that published surveys simply can't capture. A CFO position managing post-merger integration across three hospital systems bears little resemblance to the same title in the survey data, even when controlling for bed size and revenue.
Healthcare consolidation fundamentally changes the nature of executive work, yet compensation frameworks rarely account for these shifts in real time. Here's how to build a more realistic approach to executive compensation during periods of organizational change.
Survey data typically segments positions by traditional metrics: number of beds, annual revenue, geographic market, or patient volume. During consolidation, these factors tell an incomplete story. A newly merged health system may show 800 beds in the data, but if those beds span four campuses with different EMR systems, competing physician networks, and disparate payer contracts, the executive complexity multiplies exponentially.
Build a complexity matrix that accounts for:
Weight each factor based on your specific situation. An executive managing integration across state lines with different certificate-of-need requirements faces materially different challenges than one consolidating two facilities in the same county. Your compensation should reflect these realities.
Standard benchmarks assume relatively stable ongoing operations. Consolidation introduces finite but intense periods of transformation work layered on top of normal operational responsibilities. This temporal intensity rarely appears in survey data, which captures steady-state compensation rather than premium pay for elevated risk and workload.
Consider structuring compensation in phases:
The integration premium acknowledges what executives privately know: consolidation work often means 60-70 hour weeks, weekend strategy sessions, difficult personnel decisions, and heightened scrutiny from boards managing significant capital deployment. Published surveys showing $400K for a COO role don't capture the reality of simultaneously running operations and leading a multi-year integration initiative.
Your relevant talent market changes during consolidation. If you're building a regional powerhouse through acquisition, you're no longer just competing with similar-sized local systems for executive talent. You're competing with larger, more established integrated delivery networks that have already completed their transformations.
The executives capable of leading successful healthcare consolidation possess specific experiences that command premium positioning:
These executives compare opportunities not just within your immediate geographic market but across regional and national consolidating systems. Your benchmarking approach needs to reflect this expanded competitive landscape.
Standard long-term incentive plans in healthcare typically reward margin improvement, volume growth, or quality metrics. During consolidation, these traditional measures often show volatility or temporary decline despite strong executive performance. Integration costs pressure margins. Volume shifts as service lines consolidate. Quality metrics may fluctuate as systems harmonize protocols.
Design incentive structures that reward integration success:
These metrics may not appear in standard compensation surveys, but they determine whether your consolidation succeeds or becomes another cautionary tale of failed healthcare mergers.
Healthcare consolidation requires extraordinary discretion, particularly in the early phases when market rumors can derail transactions or spook medical staffs. Executives leading these efforts operate under intense confidentiality constraints that limit their ability to seek advice, build external support networks, or even discuss their daily challenges.
This isolation carries real costs that benchmarks don't typically capture. Consider whether your compensation acknowledges:
The most talented executives have options. They'll accept these constraints when compensation reflects the unique demands of confidential, high-stakes consolidation work.
Healthcare consolidation represents one of the industry's most significant trends, yet compensation practices often lag behind organizational reality. Published benchmarks provide a useful starting point, but they can't substitute for thoughtful analysis of your specific situation.
The executives who successfully navigate healthcare consolidation deserve compensation structures that acknowledge the complexity, risk, and intensity of their work. This means moving beyond simple percentile positioning in survey data toward customized packages that reflect integration realities. Organizations that recognize this distinction position themselves to attract and retain the specialized expertise required for successful consolidation—a competitive advantage that compounds over time as integration proceeds.
When evaluating executive compensation during periods of organizational change, the question isn't whether you're paying at the 50th or 75th percentile of published data. It's whether your compensation philosophy attracts leaders capable of managing the specific complexities your consolidation presents, retains them through the most challenging integration phases, and rewards the outcomes that actually determine your strategic success.
Standard surveys capture steady-state roles based on metrics like bed count and revenue, but they don't account for the exponential complexity of consolidation work. An executive managing post-merger integration across multiple systems with different technologies, cultures, and regulatory environments faces far greater challenges than the same title suggests in survey data.
An integration premium is additional compensation recognizing the 12-24 month period of elevated complexity and workload during consolidation. It acknowledges that executives often work 60-70 hour weeks managing both normal operations and intense transformation work that standard benchmarks don't capture.
Instead of traditional metrics like margin improvement or volume growth (which often decline temporarily during integration), incentives should reward integration-specific achievements. These include successful EMR conversions, physician retention during transitions, culture integration metrics, and achievement of projected synergies.
Organizations undergoing consolidation compete for a specialized pool of executives with proven integration experience, not just local candidates with similar titles. These leaders compare opportunities across regional and national systems, requiring compensation that reflects this expanded competitive landscape and their specific change management expertise.
It's compensation that acknowledges the professional costs executives face during confidential consolidation work, including limited ability to build external profiles, restricted industry participation, and isolation from normal peer support networks. This recognizes the unique stress and career risk of managing high-stakes organizational change under strict confidentiality requirements.