For hospitals and health care systems, one response to the need to operate more efficiently has been to shift a portion of senior management compensation from salary — a fixed expense — to incentive pay and bonuses, which are variable expenses. Thirty-two percent of providers surveyed by Coopers & Lybrand said incentive plans are part of their executive compensation packages. The larger the system, the more likely it is to offer such a plan. Of those offering variable compensation, job title is the most common criterion for eligibility: The higher a manager is in the hierarchy, the more likely that person is to be eligible for incentives or bonus pay.
SOURCE: TOTAL COMPENSATION IN THE HEALTHCARE INDUSTRY: 1997, COOPERS & LYBRAND, NEW YORK, 1998