ACTION UNDER INTERIM AUTHORITY RETENTION SALARY ADJUSTMENT FOR VIRGINIA McFERRAN, CHIEF INFORMATION OFFICER, UCLA HEALTH SCIENCES, LOS ANGELES CAMPUS
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1 U N I V E R S I T Y O F C A L I F O R N I A BERKELEY DAVIS IRVINE LOS ANGELES MERCED RIVERSIDE SAN DIEGO SAN FRANCISCO SANTA BARBARA SANTA CRUZ 1111 Franklin Street Oakland, CA Phone: (510) Fax: (510) January 24, 2014 IN CONFIDENCE PRESIDENT OF THE UNIVERSITY CHAIRMAN OF THE BOARD OF REGENTS CHAIR OF THE COMMITTEE ON COMPENSATION Compensation Item/Type: Retention Salary Adjustment Funding Source: Non-State-Funded ACTION UNDER INTERIM AUTHORITY RETENTION SALARY ADJUSTMENT FOR VIRGINIA McFERRAN, CHIEF INFORMATION OFFICER, UCLA HEALTH SCIENCES, LOS ANGELES CAMPUS EXECUTIVE SUMMARY Action under interim authority is requested for a retention salary adjustment of 12.9 percent for Virginia McFerran as Chief Information Officer, UCLA Health Sciences, Los Angeles campus, effective January 1, The proposed salary adjustment will increase Ms. McFerran s base salary from $354,300 to $400,000. Action under interim authority is requested in order to retain Ms. McFerran, who has received an employment offer from a competing health care institution. Ms. McFerran currently serves as Chief Information Officer for the entire UCLA Health Sciences enterprise. She has played and continues to play a vital role in the successful implementation of the $350 million CareConnect integrated electronic health record (EHR) project. The EHR project is one of several applications that will allow UCLA Health Sciences to measure clinical quality outcomes and comply with the meaningful use requirements of the American Recovery and Reinvestment Act of This includes using an EHR for functions that both improve and demonstrate the quality of care, such as e-prescribing, electronic exchange of health information, and submission of quality measures to the Centers for Medicare and Medicaid Services. In addition, Ms. McFerran supports the information technology elements associated with UCLA s participation in the Clinical and Translational Science Institute, which is supported by an $81.3 million National Institutes of Health (NIH) grant. Ms. McFerran received a competitive offer at the upper end of the market scale for chief information officers employed in large health provider organizations. The growing salary pressure in this field is the result of the EHR government mandate and payer/consumer expectations. The 75 th percentile for base salary in the applicable Market Reference Zone (MRZ) is $362,000 and the 90 th percentile is
2 -2- $420,000. The base salary proposed here for Ms. McFerran is 10.5 percent above the 75 th percentile of the MRZ and 4.8 percent below the 90 th percentile of the MRZs. The annual revenue of the UCLA Health Sciences enterprise is $3.4 billion. Given Ms. McFerran s experience and scope of responsibilities, the proposed salary is appropriate for Ms. McFerran. Due to the aggressive employment offer made to Ms. McFerran, action under interim authority is requested to ensure retention of this key executive who plays a critical and central role for UCLA Health Sciences. This position is funded from non-state funds. RECOMMENDATION The President recommends approval of the following items in connection with a retention salary adjustment for Virginia McFerran as Chief Information Officer, UCLA Health Sciences, Los Angeles campus: (1) Per policy, continued appointment as Chief Information Officer at 100 percent time. (2) Per policy, a salary adjustment of 12.9 percent, increasing Ms. McFerran s annual base salary from $354,300 to $400,000. (3) Per policy, continued eligibility to participate in the Clinical Enterprise Management Recognition Plan (CEMRP) with a target award of 15 percent of base salary ($60,000) and a maximum potential award of 25 percent of base salary ($100,000). The actual award will be based on performance against pre-established objectives. (4) Per policy, continuation of a monthly contribution to the Senior Management Supplemental Benefit Program of five percent of base salary. (5) Per policy, continued eligibility to participate in the UC Home Loan Program, subject to all applicable requirements. (6) Per policy, standard pension and health and welfare benefits and standard senior management benefits (including senior management life insurance and executive salary continuation for disability after five years of Senior Management Group service). (7) This action will be effective January 1, Recommended Compensation Effective Date: January 1, 2014 Base Salary: $400,000 Clinical Enterprise Management Recognition Plan (CEMRP): $60,000 (at 15 percent target rate) Target Cash Compensation:* $460,000 Market Reference Zone: (25 th %: $285,000, 50 th %: $316,000, 60 th %: $334,000, 75 th %: $362,000, 90 th %: $420,000) Funding: Non-State-Funded
3 -3- Budget &/or Prior Incumbent Data Title: Chief Information Officer, UCLA Health Sciences Base Salary: $354,300 Clinical Enterprise Management Recognition Plan (CEMRP): $53,145 (at 15 percent target rate) Target Cash Compensation:* $407,445 Market Reference Zone: (25 th %: $285,000, 50 th %: $316,000, 60 th %: $334,000, 75 th %: $362,000, 90 th %: $420,000) Funding: Non-State-Funded * Target Cash Compensation consists of base salary and, if applicable, incentive and/or stipend. COMPETITIVE ANALYSIS FOR CHIEF INFORMATION OFFICER MEDICAL CENTER MARKET REFERENCE ZONE FOR BASE SALARY MARKET COMPOSITE FOR TARGET CASH COMPENSATION Percentiles 25 th 50 th 60 th 75 th 90 th Percentiles 25 th 50 th 60 th 75 th 90 th Market Data $285K $316K $334K $362K $420K Market Data $363K $436K $463K $529K N/A % Difference from Market 40.4% 26.6% 19.8% 10.5% -4.8% % Difference from Market 26.7% 5.5% -0.6% -13% N/A Survey Source: Council of Teaching Hospitals (COTH) Custom Analysis survey 4A and 4B module The compensation described above shall constitute the University s total commitment until modified by the Regents, the President, or the Chancellor, as applicable under Regents policy, and shall supersede all previous oral and written commitments. Compensation recommendations and final actions will be released to the public as required in accordance with the standard procedures of the Board of Regents. Submitted by: UCLA Chancellor Block Reviewed by: President Napolitano Committee on Compensation Chair Kieffer Office of the President, Human Resources
4 -4- Approved: Janet Napolitano President of the University Date Bruce D. Varner Chairman of the Board of Regents Date George Kieffer Date Chair of the Committee on Compensation
5 -5- BACKGROUND Approval by the President, the Chairman of the Board of Regents, and the Chair of the Committee on Compensation is required for this action because the position of Chief Information Officer is a Level Two SMG position and the proposed base salary rate exceeds the 75 th percentile of the position s Market Reference Zone (MRZ). Virginia McFerran is being recruited aggressively by Sharp Healthcare, a major integrated regional health care delivery system located in San Diego, and has been extended an offer of employment for the Chief Information Officer (CIO) position. The terms of this competing offer consist of an annual base salary of $450,000 with a target cash incentive of 30 percent of base salary. In Ms. McFerran s current role as UCLA Health Sciences CIO, she earns an annual base salary of $354,300 with target incentive award of 15 percent of base salary and a maximum potential award of 25 percent of base salary. The proposed base salary of $400,000 is 24.7 percent above the average base salary of $320,877 for the CIOs at the other medical centers. The proposed base salary is appropriate given Ms. McFerran s experience, the scope of her responsibilities relative to her peers, and the size of the institution. Under Ms. McFerran s leadership, the UCLA Health System and its hospitals have been designated among the nation s 2013 most wired institutions in recognition of their implementation and use of information technology in their health care delivery systems. Also in 2013, the UCLA Health System reached the Stage 7 Award: Shared Patient Data, Without Paper, a Healthcare Information and Management Systems Society (HIMSS) Analytics Electronic Medical Record (EMR) Adoption Model SM (EMRAM), which tracks the adoption of EMR applications within hospitals and health systems across the United States, with the goal of eliminating paper charts. All UCLA hospitals were awarded Stage 7. (Less than two percent of the hospitals in the country reach Stage 7.) In three-and-a-half years, the UCLA Health System went from Stage 3 to the highest level possible. This is, on average, a six-year effort for the handful of hospitals that have succeeded. Ms. McFerran authored the Clinical and Translational Science Award (CTSA) Bioinformatics core grant, which was awarded to the UCLA Health System three years ago, and has been an active participant in the work funded by the grant. With Ms. McFerran s guidance, the UCLA Health System established an Office of Health Informatics and Analytics (OHIA), which enables research across the UC system through the UC ReX program, allowing employees to incorporate data and use scenario-modeling in organizational decisions. In addition, the OHIA technology and systems capabilities are integrated with UCLA campus-wide research informatics programs and available to other UC principal investigators who conduct research using clinical information. This office is fundamental to a large NIH grant proposal just submitted to the funding opportunity known as Big Data to Knowledge Center of Excellence.
6 -6- The IT organizational challenges associated with achieving EHR implementation, accomplishing integration goals and building analytical capabilities in parallel have been extraordinary. The EHR program implementation has met all its go-live deadlines and is on budget, even though the scope of the program has grown somewhat since its initial conception. COMPETITIVE ANALYSIS FOR CHIEF INFORMATION OFFICER MEDICAL CENTER MRZ Visual: Base Salary Across Locations Market Composite Visual: Target Cash Compensation Across Locations Key to MRZ Visual Target Cash Compensation Location Salary (in thousands) (in thousands) UCI $310K $357K UCD $319K $367K UCSD $332K $382K UCLA $400K $460K
7 COMPENSATION FOR VIRGINIA McFERRAN, CHIEF INFORMATION OFFICER, UCLA HEALTH SCIENCES, LOS ANGELES CAMPUS MRZ Range (25 th %: $ 285,000, 50 th %: $316,000, 60 th %: $334,000, 75 th %: $362,000, 90 th %: $420,000) Page 1 of 2 RECEIVING EXCEPTION APPROVAL ITEM YES NO AMOUNT TO POLICY REQUIRED SALARY AND OTHER CASH PAYMENTS Annual Base Salary X $400,000 YES REGENTS Health Sciences Compensation Plan X Additional Salary (Stipend, add-ons, etc.) X Clinical Enterprise Management Recognition X $60,000 NO REGENTS at 15% target rate Any other bonuses/incentives X Annual Incentive Plan (Office of the CIO only) X Senior Management Supplemental Benefit Program - X $20,000 NO REGENTS eligible to receive monthly contribution of 5% of base salary. BENEFITS AND PERQUISITES Standard Benefits Package (Health, UCRP, Vision, X NO REGENTS Dental, etc.) Automobile Allowance X Leased Automobile X Senior Manager Life Insurance X NO REGENTS Executive Salary Continuation for Disability (eligible X NO REGENTS after five years of service as an SMG member) UC Home Loan Program X NO REGENTS University-provided Housing (President/Chancellors) X Educational Expenses X Other Perqs please list below X ONE-TIME PAYMENTS/REIMBURSEMENTS Payment in Lieu of Sabbatical Pay X Relocation Allowance. X Temporary Housing Allowance X Two-house hunting trips X Payment in lieu of Vacation Pay X Moving Expenses/Movement of Household Goods X
8 COMPENSATION FOR VIRGINIA McFERRAN, CHIEF INFORMATION OFFICER, UCLA HEALTH SCIENCES, LOS ANGELES CAMPUS MRZ Range (25 th %: $ 285,000, 50 th %: $316,000, 60 th %: $334,000, 75 th %: $362,000, 90 th %: $420,000) Page 2 of 2 RECEIVING EXCEPTION APPROVAL ITEM YES NO AMOUNT TO POLICY REQUIRED FUTURE BENEFITS Post-retirement Employment Agreements X Consultant/Independent Contractor Agreement X Severance/Separation Agreement X Sabbatical/Administrative X Special Health Benefits or Other Benefits X OTHER Administrative Fund Allocation X Corporate Board Service X Other X TOTAL ANNUAL EMPLOYEE COMPENSATION $480,000 REGENTS (Including, if applicable, Salary, Perquisites, One-time Payments, Future Benefits, and Other) Please note that all payments, reimbursements, special benefits, etc. should be listed on this form in order to be authorized by the President and the Regents. This information will be released to the public. The only compensation permitted is the compensation listed on these summary pages.
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