The Parkland Health and Hospital System voted this week to raise minimum wage to $10.25 per hour and pay for it out of a pool of money that would’ve gone to top executives for meeting targeted incentives.
The hospital’s board learned that 230 system employees weren’t making a living wage and bumped entry-level positions to $10.25 from $8.78. The state’s minimum wage is $7.25. The plan will go into effect on July 1 and mostly affects employees in environmental, linen, and dietary services, said Dr. Jim Dunn, Parkland’s executive vice president and chief talent officer.
The $350,000 it will cost to boost minimum wage will be covered each year by money laid out in the new Pay For Performance plan, which was also approved by the board last week.
From now on, Parkland will judge incentives given to executives by their performance in the following measures: quality, service, people, and operations. Seventy-five percent of the measures will be system based while 25 percent will be personal goals. To determine the former, the hospital will analyze metrics such as readmission rates and employee turnover.
As it relates to the minimum wage increase, the first cut to fund such a plan will come off the backs of the leader,” Dunn said. “One of the important things to understand is it’s not a bonus program. It’s quite the opposite in that it takes the full amount of an executive would likely earn in the marketplace and places a portion of the income at risk.”
Executives stand to share between $3 million and $5 million over a full fiscal year, Dunn said. For the remainder of 2014, the 60 top executives could earn between $750,000 and $1.2 million.
The idea came after the arrival of CEO Dr. Fred Cerise, who inherited a once-beleaguered health system that just last completed an overhaul that saved its Medicare funding. Dunn said the goal was never to lead the country in accountability methods or serve as a model for other public health systems.
He said Cerise believes it is the best way for the hospital to cement the gains it made to become compliant with federal demands.
“We were not trying to be leaders in this market. This makes sense for our current talent strategy here at Parkland,” Dunn said. “It makes sense for the new culture we are looking to cultivate across Parkland. It makes sense that we are a newly formed executive team with different ideas and we’re coming to the table with what some may call out-of-the-box thinking.”