'Several hundred' VUMC salaries to be tied to financial results

Officials with Vanderbilt University Medical Center offered more detail Monday on a plan to tie employees' salaries to overall financial results.

In a letter to employees last week, Vice Chancellor of Health Affairs Jeff Balser outlined VUMC's cost reduction strategies that began last July. He reported that the fiscal year's revenue loss was underestimated by $70 million, but that VUMC was on track with cost-saving efforts. In detailing how compensation and benefit models "must increasingly reflect the realities of a changing health care economy," Balser said a component of employee compensation would be tied to overall Medical Center results.

Several hundred members of VUMC's management team, including senior leadership, have been designated to move to such a compensation model, said spokesman John Howser. The model cuts those employees' salary by five percent and then makes them eligible to earn back that amount. If the health system reaches its financial target, the employees will receive an incentive payout equal to five percent — or more — of their salary.

Additionally, as Balser said in his letter, there will not be an across-the-board salary increase for the coming year.

"However, based on the outcome of market-based compensation analyses, some areas within the Medical Center's workforce will experience salary adjustments so that we remain market competitive," Howser said.

For more about Balser's letter, click here.