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Are community health centers’ chief executive officers’ compensation related to clinical performance?

Davlyatov, Ganisher; Borkowski, Nancy; Qu, Haiyan; Burke, Darrell; Bronstein, Janet; Brickman, Andrew

doi: 10.1097/HMR.0000000000000255
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Background Most research of chief executive officer (CEO) compensation in the health care industry has been limited to hospitals. This study expands our knowledge of CEO compensation into the nonhospital areas of the industry, specifically community health centers (CHCs). CHCs are safety-net providers that are an integral part of the U.S. health delivery system for medically underserved populations. Since the passage of the Patient Protection and Affordable Care Act, the federal government has created financial incentives for CHCs to improve care through access and quality performance criteria. To promote quality improvement, CEOs need to set their organization’s priorities. One method used to achieve this goal is to tie the CEO’s compensation to the organization’s quality performance. However, there is a gap in our knowledge if CHCs’ CEOs compensation is associated with quality performance outcomes.

Purpose The primary aim of this study was to examine the relationship between clinical performance and CEO compensation in CHCs.

Methods/Approach Agency, social comparison, and managerial power theories guided this research, which examines the relationship of clinical performance and CEO compensation. Secondary data on Uniform Data System’s CHC clinical performance combined with CEO compensation from Internal Revenue Service Form 990 were analyzed using generalized estimating equations with state and year fixed effects on a national sample of section 330 grant-funded CHCs (N = 984) for the period 2011–2016.

Results We found no evidence that clinical performance was associated with CHCs’ CEO compensation. Except for race, all other CEO characteristics were positively associated with CEO compensation and in line with previous research. We found that non-White CEOs were compensated more than White CEOs. In addition, further subanalyses revealed that an increase in the highest paid employees’ compensation was associated with an increase in CEO compensation.

Practice Implications The findings of this study can assist Health Resources and Services Administration improve its assessment policies in funding allocation to CHCs, as well as help board members make informed decisions regarding tying CEO compensation to predetermined performance metrics.

Ganisher Davlyatov, PhD, is Researcher Scientist, Department of Health Services Administration, School of Health Professions, University of Alabama at Birmingham.

Nancy Borkowski, DBA, FACHE, FHFMA, is Professor, Department of Health Services Administration, School of Health Professions, University of Alabama at Birmingham. E-mail: nborkows@uab.edu.

Haiyan Qu, PhD, is Associate Professor, Department of Health Services Administration, School of Health Professions, University of Alabama at Birmingham.

Darrell Burke, PhD, is Associate Professor, Department of Health Services Administration, School of Health Professions, University of Alabama at Birmingham.

Janet Bronstein, PhD, is Professor Emeritus, Department of Health Care Organization and Policy, School of Public Health, University of Alabama at Birmingham.

Andrew Brickman, PhD, is Executive Director of Strategic Clinical Initiatives, Health Choice Network, Miami, Florida.

No funding was received for this research.

This research was approved as not human subjects research by the authors’ institution’s institutional review board.

The authors have disclosed that they have no significant relationship with, or financial interest in, any commercial companies pertaining to this article.

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