Worcester Business Journal

wbjournal.com | January 6, 2020 | Worcester Business Journal 33 Earning the big bucks Be cautiously optimistic for 2020 V I E W P O I N T E D I T O R I A L T his is a trying time to be a healthcare executive. Insurers and government officials are calling on the industry to curb rising costs, while simultaneously the demand for health care is growing, meaning the industry needs more workers, who need to be enticed with attractive salaries. It is easy to scoff at the $2.3 million in total compensation made by Eric Dickson, president and CEO of UMass Memorial Health Care in Worcester, and say he is overpaid. Dickson is the highest-paid nonprofit executive in Central Massachusetts. In fact, eight of the top 10 highest paid nonprofit executives work in the healthcare in- dustry, according to the most recent data available from U.S. Internal Revenue Service filings. Yet, look at the value Dickson provides; while $2.3 million is a big number, it is much lower than what a private company executive would earn for leading a similar $2.4-billion enterprise. Since Dickson took over at UMass Memorial in 2013, he has trimmed the number of executives and cut the amount those executives got paid while at the same time increasing the average per-employee salary of every non-executive at UMass Memorial. Dickson's predecessor, John O'Brien, made $3.5 million in total compensation in his final year. While not immune to the cost pressures impacting an organi- zation of UMass Memorial's size, Dickson managed to generate a total positive margin of $163 million in his first five years at the helm. While still the largest employer in Central Massachusetts, UMass Memorial has been forced A s business owners prepare for a new year, talk of tariffs, trade wars, talent, and interest rates are top of mind. For the most part, these factors are not having a significant impact on businesses here in Worcester. e good news is Worcester is in the midst of an exciting renaissance with a robust economy. e city is fortunate to have UMass Medical School based here, and the campus continues to grow and attract technology and research companies. We have a strong and diverse economy with a lot of exciting developments on the horizon, including the anticipated arrival of the Worcester Red Sox in 2021. e team will play at Polar Park in the heart of the city's Canal District once the 18-acre, $240-million redevelopment project is complete. is is just one of many examples of abandoned sites and former manufacturing facilities being repurposed and bringing in new and growing industries. Attracting qualified talent remains a challenge for many industries with historically low unemployment. In particular, the banking and finance industry is experiencing these challenges. With career-long bankers looking to retire, the pool of junior bankers is not large enough to fill those roles in the next decade. In past years, training programs helped college graduates interested in pursuing a banking career. Today, those training programs are a fraction of the size and usually take place in larger more metropolitan cities, such as Boston. Retail, packaging, and distribution companies are also feeling the squeeze from the shortage of talent and have sought to hire retirees for part-time roles to simply keep up with the growing demand coming with a healthy economy. e trucker shortage is projected to leave 175,000 unfilled jobs by 2026, according to the American Trucking Association, potentially delaying orders and increasing the cost of goods. Many companies Wells Fargo speaks with regarding capital spending remain cautiously optimistic, but they are more focused on spending for critical needs. With an election year around the corner, uncertainty remains regarding interest rates and potential policy changes. More conversations with our clients and prospects shi to the topic of risk. An increasing number of companies have been victims of cyber-breaches or security hacks, and business owners are increasingly more aware of the importance of protecting assets, customer information, and company reputation. While two of the most important themes in business are speed and security, those two factors can sit in opposition. Added security and multiple lines of defense generally takes time to build and implement, but it is an investment well spent to prevent business interruption and financial losses. Looking ahead to 2020, I remain optimistic. I believe growth will be conservative but will continue, and I feel fortunate to be part of the exciting momentum underway in Worcester. Deb Larsen is the commercial banking regional manager in Worcester and Springfield for Wells Fargo. BY DEB LARSEN Special to the Worcester Business Journal to become more efficient and as a result, reduced it workforce 8%. At the same time, healthcare and social service jobs in Central Massachusetts grew by 11%. is shi has meant while UMass has been reducing staff, the likes of Family Health Center of Worcester, Edward M. Kennedy Community Health Center and Reliant Medical Group have all increased their headcounts, as WBJ News Editor Grant Welker points out in his story "Cutting at the top" on Page 10. As the industry grows to meet rising demand while simultaneously trying to curb costs, high- cost players like UMass Memorial will have to take on a reduced role. e most in-demand job expected for Massachusetts until 2026 is home health aide, a position typically making $30,000 annually and largely focused on helping people age in their homes. Part of the overall containment in healthcare costs will come from this shi towards lower-cost services from lower-cost providers. Could UMass Memorial hire a CEO for signifi- cantly less than Dickson's $2.3 million and still have that person be an effective and efficient leader in a shiing industry? Maybe. But that would require the UMass Memorial board to strike gold on an executive it could hire at a discount, presumably because her/his effectiveness was unproven. And if that leader initially toiled away at a salary of, say, $500,000, other organizations would soon make job offers with far more attractive salaries. Executive compensation is tricky. Some leaders are overpaid, while others will outperform their salaries. Dickson's results to date suggest he is up to the task of guiding the region's largest employer. The Worcester Business Journal welcomes letters to the editor and commentary submissions. Please send submissions to Brad Kane, editor, at bkane@wbjournal.com. Deb Larsen W A T H O U SA N D WO R D S B Y D O N L A N D G R E N W

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