The document discusses compensation strategies at Alameda Health System (AHS). It notes pay disparities between employees at AHS' core facilities and those acquired from Alameda and San Leandro Hospitals. Achieving pay parity across the system would cost an estimated $5.7 million, with $4.9 million needed for Alameda Hospital employees alone. The recommendations are for AHS to achieve pay parity more quickly than the originally planned 5 years, in order to improve quality of care, recruitment, retention and employee engagement across the integrated system.

1. AHS Compensation Strategy
Critical Issues
AHS Board Education Session
September 14, 2016
Jeanette Louden Corbett
Tony Redmond
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2. Agenda
• Background
• Compensation Philosophy
• The Market Place (Bay Area Healthcare)
• Total Compensation
• Impact of AHS Acquisitions
• Recommendation to align compensation
structure throughout AHS
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3. AHS Compensation History
• When Hospital Authority started in late
1990’s, Alameda County compensation levels
were carried forward to ACMC
• Over time, need to compete for talent caused
compensation levels to gradually increase
• ACMC/AHS established compensation
program for employees and adjusted labor
negotiations strategy
• Current compensation levels more closely
approach healthcare competitors
3

4. Compensation Philosophy
• A compensation philosophy is simply a
formal statement documenting the
company's position about
employee compensation. It essentially
explains the “why” behind employee pay
and creates a framework for consistency.
4

5. Compensation Philosophy
• Achieving the Alameda Health System mission depends on our
ability to provide exceptional quality, accessible care for our
community. Our Total Compensation Program is designed to support
our efforts to become an Employer-of-Choice within the Bay Area
healthcare community.
• Our compensation program reinforces a productive work climate and
a culture of accountability while fostering career progression at AHS.
• The benefits program demonstrates AHS’s commitment to the long-
term physical, emotional and financial health of our most valuable
assets: our employees.
5

6. Compensation Philosophy
• We believe a candid, merit-based approach to
compensation is one way to help make us an Employer-
of-Choice by building upon AHS’s culture of excellence,
rewarding employee achievements and developing
employee talents.
• We recognize that this approach is not congruent with
the typical union approach of increasing compensation
with across the board cost of living increases and
automatic step increases based on time in position
• We continue to push for merit based compensation in
labor negotiations
6

7. Compensation Practices
• Compensation Positioning
– Compensation targets positioned at 50th percentile of the
market.
• Factors Influencing our Compensation Program
– Alignment with AHS objectives, AHS interests
– Affordability and reflective of company performance (budget,
results)
– Market rates for hard-to-fill positions
– Locally compliant & other administrative considerations
• Ideally, AHS targets:
– New hires, newly promoted or developing employees should be
positioned in the lower third of the range
– Fully proficient, solid performers around the midpoint over time
(in 5th year or so)
– Exceptional performers with long-term sustained performance in
the top third of the range over time
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8. Salary Ranges
Min
80% of midpoint
Midpoint
approximates market
50th percentile
Max
120% of midpoint
Salary Ranges:
– Are built with an appropriate Market Pricing,
representing the range of competitive pay for a
particular job or group of jobs
– Are built upon data from competent industry
compensation surveys / vendors
– Utilize industry and geography-specific data points
– Are specific to each group of jobs and levels
– Are developed for each category of EE’s (Represented
and Non-represented, FLSA status)
8

9. Total Compensation Strategy
• We compete for talent in the external market with a focus
primarily on healthcare in the San Francisco East Bay.
• We position ourselves to target remuneration at the median
level in relation to other major health systems in the San
Francisco Bay Area. Given total cost of compensation including
benefits, we may not always achieve actual base salaries at
median levels.
• AHS annually reviews our practices relative to the external
market and as a result periodically adjusts our compensation and
benefit offerings.
• Any changes to our Total Compensation Program must be
reasonable and take into consideration both the needs of AHS as
an employer and those of the community receiving our services
as well as our employees.
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10. Total Compensation Strategy
The AHS Total Compensation Program is composed of:
• Market-driven base salary
• Periodic increases for employees; Merit increases based on
performance where possible
• Generously funded pension and retirement plans
• Highly competitive, comprehensive health and welfare benefits
• This is the compensation strategy for our unrepresented positions
and influences the way in which we negotiate salary increases with
our unions. We follow the same guiding principles in evaluating
market compensation practices for our union and non-union
positions.
• Only about 50 represented employees in ACMEA receive merit
based annual changes to compensation.
• In the future, variable pay for leadership positions (we will discuss
this at a later meeting)
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11. The Compensation Market Place
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12. Bay Area Healthcare Market
• Recent Nursing Settlements:
• SHC/LPCH 4% a year for 3 years MAY
2016
• Include other recent settlements
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13. Retirement Plans
• AHS provides opportunities for significant retirement savings through two
generous plans which enable eligible employees to contribute up to the fully
allowed IRS maximum in each plan. This is a uniquely valuable retirement
benefit that makes our Total Compensation Program highly competitive.
• Defined Benefit Pension Plan: The ACERA retirement plan provides
lifetime benefits to members of the retirement system who meet the
minimum age and length-of-service requirements or are eligible for disability
retirement. Eligible members receive a guaranteed, lifetime benefit at
retirement, calculated by a set formula, which includes, but is not limited to,
the member’s age, years of service, member type and salary. Employer and
employee contributions make up the funding source for the plan.
• Defined Contribution Plan: Under the defined contribution plan, both AHS
and the employee contribute 5% of pensionable salary. Employees can
also choose to contribute up to an additional 5% toward retirement savings
with AHS matching the employee contribution. Employee contributions are
deducted from payroll on a pre-tax basis. The amount of money available
upon retirement is based on the actual account balance.
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14. Retirement Plan as a part of Total
Compensation at AHS
• Retirement Plans
– Cost of Retirement Plans
• ACERA
– EE 9% ER 23.75%
• Steel Workers (Alameda/San Leandro)
– EE 0% ER 10%
• SEIU (Alameda/San Leandro)
– EE 0% ER 7.25%
• Stationary Engineers (Alameda/San Leandro)
– -EE 0% ER 15.5%
• AHS Plans
– EE 5% ER 5%; optional additional 5%
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15. Health and Welfare Benefits
• Our broad range of health and welfare benefits are described in detail in the
Benefits Enrollment Guide. In general, our philosophy is to provide a highly
competitive, cost effective and innovative benefit program that is tailored to
each employee’s needs. Our comprehensive offerings go well beyond
affordable health, dental and vision care to include the following:
• Exceptional Healthcare coverage with low employee contribution to costs
• Self Insured Plan available to employees at no cost
• Long-term disability coverage
• Above-market paid time off allowances with purchase and/or sell options
• Employee Assistance Program counseling for emotional, legal or financial
issues
• Financial benefits that include discounts for car, home and pet insurance
• Education allowances and professional development opportunities
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16. AHS Core Engagement Score on
Benefits and Compensation
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17. Alameda Hospital Engagement Score
on Benefits and Compensation
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18. San Leandro Hospital Engagement
Score on Benefits and Compensation
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19. Acquisitions
• The acquisition of San Leandro and Alameda Hospitals during the 2013/14
fiscal year increased the total AHS workforce by nearly 50% in a very short
period of time.
• San Leandro Hospital had been a part of Sutter Health; labor represented
employee salaries were generally close to market; non represented
employee salaries varied
• Alameda Hospital had not increased salaries in 7 years and had reduced
unrepresented employees by 5% in an attempt to remain solvent and viable.
• There are significant gaps in both hospitals from the salaries in the AHS
core.
San Leandro
Hospital Alameda Hospital Core Consolidated
Paid full time equivalents (FTE) 354 541 3,057 3,952
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20. Current Compensation Challenges for Alameda Hospital and San
Leandro Hospital
• The following data points contrast pay disparities for like titled represented and
unrepresented roles analyzed across the system.
 On an overall basis, amongst like titled roles system-wide, the total cost to
achieve pay-parity to represented roles is approximately $5.7million, with 60%
of the gap encompassed by Alameda Hospital employees
• Alameda Hospital
– Alameda Hospital currently has 273 employees paid below the average salary of
their represented counterparts at AHS Core, with a total pay parity gap of
approximately $4.9 million
– Relative to unrepresented roles at AHS Core, Alameda Hospital lags average
salaries in the Core by a total of approximately $248,000
• San Leandro Hospital
– San Leandro Hospital has 134 employees earning less than the average of
represented employees at AHS Core, with a total gap of $1.31 million
– For unrepresented employees, the total sum to achieve parity is approximately
$282,000
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21. Results Experienced Because of Pay
Disparities
• We are experiencing difficulty in recruiting and
retaining highly qualified staff at both hospitals
• Our value is to assure that our patients and their
families come first in determining how we provide
care. We believe that our higher levels of registry
and traveler utilization could affect the consistency
of high quality patient care
• As employee turnover increases, stress increases
for remaining staff leading to increased overtime
and sick leave
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22. Current Salaries and Wages by Entity
San Leandro
Hospital Alameda Hospital Core Consolidated
Salaries and wages $ 39,205,438 $ 43,739,403 $ 319,283,098 $ 402,227,939
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23. Salaries and Wages with Pay Adjusted
to meet parity with Core
San Leandro
Hospital
Net New
SLH Alameda Hospital Net New AH Core Consolidated
Salaries and
wages $39,205,438 $1,310,000 $43,739,403 $4,900,000 $319,283,098 $408,437,939
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24. 5 Year trend with and without
adjustment
Consolidated 3% 3% 3% 3% 3%
$ 408,437,939 $ 420,691,077.62 $ 433,311,809.95 $ 446,311,164.25 $ 459,700,499.18 $ 473,491,514.15
Consolidated 3% 3% 3% 3% 3%
$ 402,227,939 $ 414,294,777.62 $ 426,723,620.95 $ 439,525,329.58 $ 452,711,089.47 $ 466,292,422.15
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25. Recommendations and Next
Steps
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 On an overall basis, AHS currently has a considerable pay gap
between similar represented and unrepresented roles across the
system, when compared to average pay at AHS Core
 We believe that AHS should achieve pay parity in as short a period
as possible.
 At the time of the acquisitions, we had anticipated reaching pay
parity in five years
 We believe that our commitment to quality patient care requires that
we move faster than originally anticipated
 We will be able to fund the increases through increased productivity
 This action will increase cohesion and collaboration across the
system and move us closer to our goal to be The Employer of
Choice in the Bay Area