To paraphrase Ogden Nash (actually Mr Nash did not utter this famous phrase, but for some reason we all think he did), “Spring has sprung, the grass is riz, I wonder where my bonus is?”
It is indeed bonus time. Executives in the private sector watched their bonuses shrivel as the oil and gas industry slid into the abyss but the 100 or so senior executives at Alberta Health Services (AHS) can rest easy. They’re being shielded from the “fiscal reality” plaguing the rest of us. Their bonuses are intact.
It’s called “pay-at-risk” for a reason
Premier Redford and Health Minister Horne strongly “suggested” that the AHS cancel the executive bonuses this year, but Stephen Lockwood, Chairman of the AHS Board, refused. He said it would be “unreasonable” to change compensation contracts after more than 90% of the fiscal year has passed.
“These people have already done the work and it would be wrong from many perspectives to not compensate them as per their terms of employment….We’ve already said that pay at risk is eliminated moving forward, but we are honouring our commitment for work that has already been completed.”*
Clearly Mr Lockwood is confused. Whether or not an employee finishes 90% of the fiscal year is utterly irrelevant. Unlike regular pay, “pay-at-risk” is not guaranteed and is not owed to an employee unless he meets specific “pay-at-risk” targets.
As my kids would say “That’s why it’s called “pay-at-risk, duh!”
Have the AHS executives earned their “pay-at-risk”?
Did the AHS executives meet their “pay-at-risk” targets? Let’s start with Dr Chris Eagle, the CEO of Alberta Health Services.
Dr Eagle’s “pay-at-risk” targets include (1) providing a safe accessible healthcare delivery system (measured in reduced wait times in the ER and for hip, knee, heart and cataract surgeries and radiation therapy), (2) improving staff and physician engagement, (3) engaging with local Health Advisory Councils and (4) creating a new organizational structure.
In the real world, targets (3) and (4) are freebies. “Engaging” local councils and “creating” a new org structure are in and of themselves pointless—what’s required is effective engagement and an effective org structure in order for these targets to count.
Back to the first two targets: wait times and improving staff and physician engagement. Dr Eagle missed all of his wait time targets—with the possible exception of treating and discharging patients from emergency within 4 hours—so the wait time targets are a “fail”. Physician engagement is sitting at an abysmal 38%—so that’s another “fail”. Consequently Dr Eagle’s “pay at risk” payout (excluding the two freebies) should be zero.
If Dr Eagle’s payout is zero then the payout for all his senior managers’ payouts will also be zero because Dr Eagle’s targets should cascade down and form part of the “pay-at-risk” targets of his senior managers.
That’s the way “pay-at-risk” compensation works in the private sector. Unfortunately that’s not how “pay-at-risk” compensation works for the PC government.
Last year AHS paid its senior staff $2.4 million in bonuses; $480,000 of which went to the AHS executive team. Dr Chris Eagle met just 63% of his targets and walked away with an extra $90,000 on top of his $580,000 salary.**
In any other organization, a university for example, 63% gets you a “D”. Only in government is a “D” worth $90,000.
But what’s really alarming is that in the real world Dr Eagle’s targets (reducing wait times, engaging with physicians) would be part of his day job for which he gets paid a $580,000 salary. Rethinking Alberta’s healthcare delivery system, eliminating physician bullying and stopping queue jumping—now that would be a legitimate “pay-at-risk” target.
Is “pay-at-risk” a term of employment?
When AHS Chairman Lockwood refers to abiding by “terms of employment” and “honouring our commitment” he implies it would be unfair or even illegal to eliminate “pay-at-risk” for this fiscal period.
While it’s true that “pay-at-risk” is a term of employment, this sudden desire to do the right thing rings hollow given that other AHS employees are not afforded the same “commitment”. Mr Lockwood appears to be just fine with the AHS decision to fire healthcare workers and reduce the hours of their overburdened colleagues, notwithstanding the terms of their employment.
But the ultimate hypocrisy comes from the lips of Health Minister Horne who said “Regardless of how people feel about the decision of the AHS board…It’s a decision for the AHS board…I don’t have the authority to interfere with someone’s contract of employment.”***
Recall that the last Health Minister fired Dr Eagle’s predecessor over the objections of the AHS Board. This Health Minister ran roughshod over at least three (count ‘em, three) agreements in principle he’d signed with the Alberta Medical Association. He’s arbitrarily reduced doctors’ compensation by $275 million and has repeatedly misled the AMA in the last year of contract negotiations.****
And now Minister Horne has had a fit of conscience…?
*Calgary Herald Online Mar 27, 2013
**Calgary Herald, Mar 29, 2013, A10
***Calgary Herald, Mar 28, 2013, A4
****AMA President’s Letter to Premier Redford Mar 22, 2013 http://bit.ly/165g8lT