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Excellent Care for All Act Updates

Performance Based Compensation


Update - as of November 22, 2011

The 2011/12 year marked the first time that performance based compensation was required as part of the Excellent Care for All Act (2010). In this second year of ECFAA, organizations will be expected to strive towards performance improvement in every aspect of implementation, including performance based compensation.

What This Means for Hospitals

ECFAA requires the compensation of CEOs and other executives to be linked to the achievement of performance improvement targets laid out in the QIP of every hospital in Ontario. As executive compensation is to be tied to the QIP, organizations are required to include a performance based compensation component as part of the QIP every fiscal year.

The purpose of performance based compensation related to ECFAA is to drive accountability for the delivery of quality improvement plans. By linking achievement of targets to compensation, organizations can increase the motivation to achieve both long and short term goals. Hospitals will be required to identify the link to compensation in the QIP Narrative. Although currently there is no mandated minimum, the government has the opportunity to mandate a specific percentage at any time.

A Push Towards Performance

Some hospitals may still be in preliminary phases of developing a performance based compensation plan for executives, however hospitals are encouraged to evaluate their performance based compensation plan to ensure that improvement is a focus. To facilitate this, organizations may wish to expand the scope of performance based compensation to other members of the senior management team, or delineate a larger portion of annual salary to variable compensation. When linking performance based compensation to priority indicators, it is suggested that organizations set aggressive targets for executives to ensure the highest level of motivation in improving organizational effectiveness.

For more information about performance based compensation, refer to the revised guidance document for 2012/13 which outlines requirements and best practice in complying with ECFAA while increasing performance.

For more information about Excellent Care for All, or to receive regular ECFAA updates, please email ECFAA@ontario.ca.

Related Legislation

Section 9.
(1) Every health care organization shall, in accordance with the regulations, ensure that payment of compensation for any executive of the organization under a compensation plan is linked to the achievement of the performance improvement targets set out in the annual quality improvement plan.

(2) This Act prevails over the provisions of a compensation plan and, if there is a conflict between this Act and a compensation plan, the compensation plan is inoperative to the extent of the conflict.

(3) Every health care organization shall give the Minister such reports as may be provided for in the regulations concerning its compliance with this section.

(4) Each report must be submitted in such form and manner as may be provided for in the regulations and within the period provided for in the regulations.

(5) Each report shall include a statement signed by a person provided for in the regulations certifying whether the health care organization has complied with this section throughout the reporting period.

(6) The Public Sector Compensation Restraint to Protect Public Services Act, 2010 applies to the compensation plans of executives during the period specified in section 6 of that Act.

(7) Where a compensation plan applicable to an executive is subject to the Public Sector Compensation Restraint to Protect Public Services Act, 2010 and the compensation plan allows for a portion of compensation to be paid to an executive on the basis of an assessment of performance, the health care organization shall ensure that the assessment of performance also includes an assessment of achievement of the performance improvement targets set out in the annual quality improvement plan.

(8) Where a compensation plan applicable to an executive is subject to the Public Sector Compensation Restraint to Protect Public Services Act, 2010 and the compensation plan does not provide for payments based on an assessment of performance, the health care organization shall ensure that the executives compensation plan is modified so that the payment of a portion of the executives compensation under the plan is made contingent upon the achievement of the performance improvement targets set out in the annual quality improvement plan.

(9) A health care organization acting under subsection(7) or (8) with respect to an executive shall be deemed to be acting in compliance with subsection (1) and with the Public Sector Compensation Restraint to Protect Public Services Act, 2010 as a result of the health care organization,

a) ensuring that the assessment of performance included an assessment of achievement of the performance improvement targets under subsection (7); or b) modifying the compensation plan under subsection(8);
if, in the result, the actual or potential compensation available to the executive does not exceed what was available to him or her on March 24, 2010 or such other applicable effective date as is determined in accordance with section 6 of the Public Sector Compensation Restraint to Protect Public Services Act, 2010.

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