Broader Public Sector Executive Compensation Executive Compensation Program Arnprior Regional Health (ARH)

Transcription

1 Broader Public Sector Executive Compensation Executive Compensation Program Arnprior Regional Health (ARH) Board Approved: September 21, 2017 Submitted for MoH Review: September 26, 2017 Revised: December 11, 2017 MoHLTC Approval to Post: January 11, 2018 Public Consultation Completed: February 23, 2018 MoHLTC Final Approval: February 26,

2 Background The Broader Public Sector Accountability Act, 2010 (BPSAA) was established in 2010 to improve accountability and transparency across the broader public sector (BPS) and all of its organizations to include Hospitals. Amendments to the BPSAA were made in 2012 and executive compensation in the BPS was restrained. Restraint under the BPSAA applied to designated executives and office holders who could earn $100,000 or more at designated employers under the Act (i.e. colleges, universities, hospitals and school boards). In March 2015, The Broader Public Sector Executive Compensation Act, 2014 (BPSECA) came into force and the purpose of the legislation was to authorize the government to establish compensation frameworks managing executive compensation in the BPS and essentially removing the restraint. On September 5, 2016, Regulation 304/16 under the authority of the BPSECA was issued and set out requirements that designated employers are to meet when establishing an executive compensation program. The Regulation was further amended in June 2017 requiring designated employers to determine executive salary and performance related pay envelopes and obtaining overseeing minister approval on comparators and the maximum rate of increase in the executive salary and performance related pay envelope. The following provides relevant information on Arnprior Regional Health s Executive Compensation Program (ECP) in consideration of the above. A. Compensation Philosophy Arnprior Regional Health s (ARH) compensation philosophy is aligned with the mission, vision and values of the organization. ARH includes an acute care hospital, a long term care home and community-based services (Assisted Living, Adult Day Program, Meals on Wheels, Rural Health Hub, Health Link). For all positions, ARH maintains pay ranges which are internally equitable within and between departments and externally competitive with comparable employers for which we compete for talent. The compensation and benefits provided are intended to attract, motivate and retain qualified members of the executive team and to recognize their contributions to the organization s achievement of operational and strategic goals. As the organization transforms along with ongoing change in the health system our labour force must also be stable, recognized for performance and complete with the necessary skills and talent to achieve our vision together we will create a health community. Each year, Board 2

3 approved corporate goals are established and cascaded down to the executive team with associated targets and weights identified for achievement. These goals are established to assist in meeting our strategic priorities and quality improvement initiatives. Since the compensation restraint measures have been in place, designated executives at ARH have been subject to a pay at risk component as a portion of their annual salaries. Compensation for executives includes pay at risk (as per the Excellent Care for All Act) and is rolled back by 2% at the commencement of each fiscal year and reinstatement in full or in part of such is pending the achievement of the identified weighted goals. B. Designated Executive Positions The designated executives at ARH are as follows: President & Chief Executive Officer Patient/Resident & CNE Finance/Support & CFO Human Resources Chief of Staff (*See Appendix A) C. Salary and Performance-related Pay Cap The maximum salary and performance related pay that a designated employer may provide to a designated executive or class of executives shall be calculated by selecting at least eight comparator organizations in which at least one executive holds a comparable position. Selected organizations are those that contain most or all of the following comparable factors: Scope of responsibilities of the organization s executives Type of operations the organization engages in Industries within which the organization competes for executives Size of the organization Location of the organization 3

4 i) Comparators In order to identify potential comparators required to establish executive compensation levels, ARH has considered the following factors as required by the Regulation: Minimum of 8 comparator organizations identified o 12 organizations identified for President & CEO, o 12 organizations identified for VP, Patient/Resident Care & CNE o 12 organizations for VP, Finance/Support & CFO o 8 organizations for VP, Human Resources (*Comparable positions N/A in 4 of the 12 organizations identified) Sectors/sites in which ARH competes for executives o Hospitals, Long Term Care Homes o Other industries where talent is transferable (e.g. Human Resources, Finance)* Organizations which may be similar in size o Also characterized as a Small and/or Community Hospitals as defined by the Ontario Hospital Association and MoHLTC o Number of employees (headcount between <200 to 999) o Number of beds (<50 Hospital Beds) o Budget ($5M-$25M and $25M- $150M) Organizations which are located in geographic areas for which ARH competes for talent (i.e. locally and/or provincially) Organizations which engage in similar breadth of work to include: o Acute Care Hospitals, Long Term Care Homes, Community Based (e.g. Assisted Living, Rural Health Hubs, Adult Day Program, Health Link), o Operate more than 1 site o Operate a medical arts building (FHT, Primary Care Physicians Offices, Private Lab/Physio, etc) Organizations with executives who have similar scope of responsibility *Although ARH executive positions possess transferable skills and compete for talent with other industries outside of healthcare, only comparators within the Hospital/Healthcare setting were considered for relativity purposes and selected for the establishment of the ECP. Comparator data related to the above was reviewed and considered as provided by the Ontario Hospital Association (OHA) through their various survey and data collection exercises. While many positions may be unique in their additional responsibilities, consideration was given to the core responsibility and highest valued role in determining comparators as it can be difficult to replicate exactly based on scope and complexity. 4

5 ii) Comparator Analysis Element President & CEO VP, Patient/Resident & CNE Comparator Small or Community Small or Community Group Criteria Hospitals in Ontario Hospitals in Ontario and Headcount between Headcount between Considerations <200 to 999 <200 to 999 Up to 50 hospital Up to 50 hospital beds beds Budget $5M-$25M Budget $5M-$25M and $25M-$150M and $25M-$150M More than 1 More than 1 discrete discrete site site Organizations whom Organizations whom we compete with for we compete with for talent (locally talent (locally and/or and/or provincially) provincially) Organizations that have responsibility for other services to include LTC Homes, Assisted Living, Family Health Teams, Community Organizations that have responsibility for other services to include LTC Homes, Assisted Living, Family Health Teams, Community VP, Finance & Support & CFO Small or Community Hospitals in Ontario Headcount between <200 to 999 Up to 50 hospital beds Budget $5M-$25M and $25M-$150M More than 1 discrete site Organizations whom we compete with for talent (locally and/or provincially) Organizations that have responsibility for other services to include LTC Homes, Assisted Living, Family Health Teams, Community Additional responsibilities beyond Finance/CFO to include support services VP, Human Resources Small or Community Hospitals in Ontario Headcount between <200 to 999 Up to 50 hospital beds Budget $5M-$25M and $25M-$150M More than 1 discrete site Organizations whom we compete with for talent (locally and/or provincially) Organizations that have responsibility for other services to include LTC Homes, Assisted Living, Family Health Teams, Community Additional responsibilities beyond Human Resources to include OHS, Health & Safety, Payroll, Benefits, Food or other support services 5

6 Comparator Position Matches Comparator Organizations President & CEO CEO 1. Renfrew Victoria Hospital 2. Winchester District 3. Almonte General Hospital and Fairview Manor 4. West Nipissing General Hospital 5. Hanover & District 6. Middlesex Hospital Alliance Patient/Resident & CNE Patient Care /CNO Sr. Clinical & CNE Clinical & CNE Patient & CNE Vice President & CNO Director Patient Care, CNE CNO, Director Patient/Family Centered Care CNO 1. Renfrew Victoria Hospital 2. Winchester District 3. Almonte General Hospital and Fairview Manor 4. West Nipissing General Hospital 5. Hanover & District 6. Middlesex Hospital Alliance Finance & Operations Sr. Corporate /CFO Finance/CFO Vice President & CFO Vice President Corporate /CFO Operations/CFO Vice President Financial CFO, Director of Corporate CFO 1. Renfrew Victoria Hospital 2. Winchester District 3. Almonte General Hospital and Fairview Manor 4. West Nipissing General Hospital 5. Hanover & District 6. Middlesex Hospital Alliance Human Resources/Support Human Resources, Public Relations, Physician Recruitment Sr. Corporate Human Resources & Quality Corporate Director, Human Resources 1. Renfrew Victoria Hospital 2. Winchester District 3. Almonte General Hospital and Fairview Manor 4. Hanover & District 5. Middlesex Hospital Alliance 6. MICs Group of Health 7. Mattawa Hospital 8. Dryden Regional Health Center 6

7 7. Haldimand War 8. MICs Group of Health 9. Mattawa Hospital 10. Riverside-Fort Francis 11. Lennox and Addington County General Hospital 12. Dryden Regional Health Center 7. Haldimand War 8. MICs Group of Health 9. Mattawa Hospital 10. Riverside-Fort Francis 11. Lennox and Addington County General Hospital 12. Dryden Regional Health Center 7. Haldimand War 8. MICs Group of Health 9. Mattawa Hospital 10. Riverside-Fort Francis 11. Lennox and Addington County General Hospital 12. Dryden Regional Health Center iii) Approved Structure Position Current Salary * Range of Maximum Salary of Comparators Comparator positions salary (50 th Percentile) ** Approved Salary Range*** President & CEO $195,000 $191,100 (-2%)* VP, Patient/Resident & CNE VP, Finance & Support & CFO $133,852 $131,175 (-2%)* $113,552 $111,281 (-2%)* $176,925 -$273,000 $221,846 Current - $195,000 Year 1 - $204,730 Year 2 TBD per pay envelope allocation Year 3 - $221,846 $115,467 - $148,337 $139,346 Current - $133,852 Year 1 - $135,893 Year 2 - $139,346 Year 3 - > $110,000 - $146,424 $133,968 Current - $113,552 Year 1 $120,102 Year 2 TBD per pay envelope allocation Year 3 - $133,968 7

8 VP, Human Resources $113,552 $111,281 (-2%)* $106,333 - $146,424 $133,227 Current - $113,552 Year 1 - $119,965 Year 2 TBD per pay envelope allocation Year 3 - $133,227 * All executive positions current salaries are subject to a 2% pay at risk (or rollback ) as per the Excellent Care for All Act (ECFAA) and pending the achievement of assigned weighted goals ** Represents the 50 th percentile (that is no greater than the point in the range which half the values fall below). *** Salary and performance-related pay is capped at no more than the 50 th percentile of appropriate comparators. Progression to the next step on the grid occurs annually and total amount allocated for all positions each year must be within the defined Salary and Performancerelated pay envelope. Pay at risk of 2% will continue to be in effect as part of the new salary range > Eligibility for economic increases consistent with what is received by non-union, non-executive staff will be re-established once the maximum of the range has been reached. D. Salary and Performance-related Pay Envelope Salary scales as noted above are in effect on September 1, 2017 as per Minister approval and reflect progression to the next step on the grid (Year 1) but not to exceed the total proposed pay envelope. To the extent possible and where information available, the following factors as outlined in the regulation have been considered in determining the salary and performance-related pay envelope: 1. Financial and compensation priorities of the Government of Ontario The government has approved a balance budget for 17/ Compensation trends Executive compensation has been restrained by BPSAA legislation introduced 2010 and continued following amendments to the Act in Proportion of Operating budget used for executive compensation Executive compensation (including benefits) represents 2.6% of ARH s operating budget. 4. Impact on attracting and retaining talent to ARH s executive positions With the exception of the role of the President & CEO, ARH has had to recruit in all other executive positions on 5 occasions over the past 7 years. In addition to challenges with ongoing recruitment and retention, salary compression between executives and staff (union and non-union) over this same period has been a challenge in addition to competition for talent given ARH s proximity to other healthcare facilities. 8

9 5. Expansion in the operations In addition to operating an acute care hospital and long term care home (the Arnprior & District and Grove Nursing Home), ARH has engaged in community program/services to include Assisted Living, Rural Health Hub, Health Link, Adult Day Program and Meals on Wheels. As per the Regulation, the envelope is determined based on the sum of salaries provided to all incumbents of executive positons for the most recently completed pay year which totaled an envelope of $548,243. A maximum rate of increase of 5% to the envelope has been identified and will allow for reasonable and affordable progression on proposed executive wage grids. E. Other Elements of Compensation The Regulation provides that a designated employer shall not provide an element of compensation, other than salary and performance related pay, to a designated executive, unless the element is also generally provided in the same manner and relative amount, to non-executive managers (defined as employees and office holders who exercise managerial functions and who directly report to one or more designated executives). With respect to any other elements of compensation aside from salary and performance pay, any remaining compensation elements that are not provided in the same manner and relative amount as what is generally provided to non-executive managers will be reviewed and adjusted accordingly no later than the third anniversary of the implementation of the ECP and as afforded in the Regulation. F. Comments/Feedback As required by the regulation, the draft ARH Executive Compensation Program was posted for public consultation from January 24, 2018 to February 23, 2018 inclusive. The public comment period was provided as an opportunity for all interested parties to provide input into ARH s draft framework. ARH continues to support and encourage a fair and balanced approach to all public sector compensation. ARH will continue to work with government understanding that this is a time of accountability, transparency and consistency in compensation for all executives throughout the Broader Public Sector. 9

10 Appendix A Addendum to the ARH Executive Compensation Program Inclusion of Chief of Staff Position ARH s initial Board approved Executive Compensation Program excluded the Chief of Staff (CoS) from the listing of designated executive positions in light of the fact the role earns a maximum annual stipend of $65,000 which is below the designated $100,000 threshold. As is the case with all small hospitals, the role of CoS does not have a full time obligation and the level of commitment (hours) is significantly less than 37.5 hours/week and varies among organizations. An analysis has been completed and includes calculated annualized salary information where possible and by making the assumption of what the current salary would be, if in fact it was a full-time position (i.e hours). Below is relevant comparator data which considers the roles current annual stipend and level of commitment relative to comparator roles. The duties and responsibilities of the CoS role appear to be substantively the same in all organizations, however the level of compensation and working hours varies. Comparator Position Maximum Annual Salary /Stipend Hours/ Year (Approx) 10 Other Elements of Compensation Assumed Annualized Salary (Approx) Arnprior Regional Health Chief of Staff $65, None $244,000 Renfrew Victoria Hospital Chief of Staff $60,000 ** None Not determined. Role does not have min/max hours associated with it. Winchester & District Memorial Hospital Almonte General Hospital and Fairview Manor West Nipissing General Hospital Chief of Staff $30,000 ** No time Chief of Staff $66, None $309,000 Chief of Staff $60, None $226,000 commitment MICs Group of Health Chief of Staff $24, None $292,000 Mattawa Hospital Chief of Staff $24,000 ** None No time commitment None Not determined. Receives a monthly stipend of $2500/month Not determined. Receives a monthly stipend of $2000/month

11 Haldimand War / Norfolk General Chief of Staff $90, None $422,000 (services both sites) Lennox and Addington County Chief of Staff $54, None $270,000 General Hospital Dryden Regional Health Center Chief of Staff $36, None $270,000 Carleton Place Hospital Chief of Staff $49, None $184,000 Kirkland & District Hospital Chief of Staff $60,000 ** None Not determined. Hours of work not provided Perth & Smith Falls Chief of Staff ** ** None $237,500 Glengarry Memorial Chief of Staff $50, None $325,000 **Data not provided/available The information above indicates that our comparators also have a CoS role with varying levels of commitment with respect to required working hours. None of the organizations above require a CoS functioning on a full-time basis but provides a maximum yearly salary/stipend of less than $100,000. Should the role be that of a full-time nature, an approximate annualized salary (to 1950 hours) is assumed based on the current salary and approximate hours worked (where applicable). Assumed Annualized Salary $184,000 $226,000 $238,000 $244,000 (Arnprior Regional Health) $270,000 $270,000 (50 th percentile) $292,000 $309,000 $325,000 $422,000 Based on the assumptions and information above, it appears as though the CoS at ARH is compensated below the 50 th percentile for the assumed annualized compensation of the comparator group. The ARH ECP however, is not considering an amendment to the current level of compensation for the CoS at this time. *** 11