As the U.S. population ages, health care providers are facing an increased demand for services and a shrinking number of health care professionals. Health care providers have made little headway in solving the problem and must begin looking at the long-term picture and balancing their ability to attract good people with their ability to keep them.

The 2006/2007 study of the health care sector reveals that providers that align pay with performance and offer more incentive opportunities are more likely to improve the attraction and retention of key talent and boost their bottom line. However, many health care providers still lack a total rewards strategy — representing an opportunity for organizations to better integrate the various elements of rewards, enhance retention and drive business results.

Key Findings

• Sixty-nine percent of health care organizations are having trouble retaining critical-skill employees to a moderate or great extent, compared with 43 percent of organizations across all industries.
• Overall, only 42 percent of health care providers have a total rewards plan/ strategy — either formal or informal — compared with 70 percent of organizations across all industries. Financially highperforming health care organizations, however, are more likely to have a formal, documented strategy than low performers.
• Like high performers in other industries, high-performing health care organizations do a better job of aligning pay with performance than low-performing organizations. They make greater distinctions in pay increases for the top 10 percent of their employees than for employees who simply meet expectations. High-performing organizations put more compensation at risk for their executives than low-performing organizations. Eighty-six percent of high-performing organizations offer short-term incentives to their top executives, compared with 68 percent of low performers.
• Long-term incentive plans are an emerging practice in the health care sector. Although only 13 percent of health care providers have such a plan in place, high-performing providers are more likely to have one for executives (29 percent versus 0 percent for low performers).
• High performers implement more best practices in compensation governance than low-performing organizations. Specifically, high performers are more likely to have a written charter for their boardlevel compensation committee, follow a documented compensation policy and use a defined peer group for competitive analyses.

	TABLE OF CONTENTS Executive Summary About the Survey Attraction and Retention Total Rewards Performance Management Governance Conclusion