Driving High-Value Care through Value-Based Hospital CEO Incentives

July 2021

A recent Health Affairs blog suggests that value data could be used to improve CEO incentive compensation systems to drive high-quality, affordable health care. Using risk-adjusted data from the CMS value-based purchasing (VBP) program, the authors looked at a cohort of 21 major west coast and southwest teaching hospitals.

Analysis revealed that there was no association between CEO compensation and value delivered—in fact, the CEO compensation at the hospital with the worst value score was twice as high as the hospital with the third highest value. Data show a nine-fold difference in compensation across the cohort CEOs and a three-fold variability in value.

The authors suggest several ways that hospitals could use value scores to determine CEO compensation, including eliminating incentive pay for CEOs whose hospitals perform in the bottom third of like facilities or developing an incentive system based on hospital value score per $100,000 of CEO compensation.

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