Thursday, February 18, 2010

University of California CEO - You Can Reduce My Pay if "You Throw In Air Force One"

The San Francisco Chronicle recently reported how students at the University of California have been providing a satirical approach to the problems of the university's leadership:
It's been a seriously dramatic year at the University of California, where hundreds of students seized buildings, demonstrated and shut down regents meetings last fall to protest rising tuition and the perceived privatization of the public school.

It's also been a satirically dramatic year, thanks to the UC Movement for Efficient Privatization, a fledgling group of mostly grad students in business attire that uses humor tinged with sarcasm to lampoon UC officials.

Their own name is an example. Many UC students believe leaps in tuition and reduced state funding are turning the public university into a private institution.

In particular, they drew attention to the university president's sense of entitlement:
UCMeP has made itself known on the Berkeley campus since September. That's when UC President Mark Yudof, who earns about $600,000, drew students' ire for telling the New York Times he'd take a $200,000 pay cut for salary parity with President Obama - if Air Force One were part of the package.

Seeing this as a philanthropic opportunity, UCMeP issued fundraising flyers: 'Help Buy Mark Yudof a Plane!'
The relevant parts of the New York Times interview, which I regret to say I missed at the time it was published, are:
Some people feel you could close the U.C. budget gap by cutting administrative salaries, including your own.
The stories of my compensation are greatly exaggerated.

When you began your job last year, your annual compensation was reportedly $828,000.
It actually was $600,000 until I cut my pay by $60,000. So my salary is $540,000, but it gets amplified because people say, 'You have a pension plan.'

What about your housing allowance? How much is the rent on your home in Oakland?
It’s about $10,000 a month.

Does U.C. pay for that on top of your salary?
Yes, and the reason they do that is because they have a president’s house, it needed $8 million of repairs and I decided that was not the way to go. Why the heck would I ever authorize $8 million for a house I didn’t want to live in anyhow?

Why can’t you have architecture students repair the house for course credit?
Let me ponder that.

What do you think of the idea that no administrator at a state university needs to earn more than the president of the United States, $400,000?
Will you throw in Air Force One and the White House?

While Yudof's response is clearly sarcastic, he obviously never substantively addressed why he is entitled to be paid comparably to the President of the richest country in the world.

We have written a few times about the travails of the University of California, some of its multiple campuses, and in particular its medical schools and teaching hospitals.  Most recently we have written about how leaders of its teaching hospitals also seemed to feel entitled to substantial compensation, including bonuses for "performance" even when their institutions were receiving bad publicity for quality problems (posts here and here).

Again and again we see examples of leaders of academic medical institutions, and health care organizations in general who seem to feel entitled to be judged differently, and rewarded differently than the common folk.  These entitlements exist even when the economy, or the financial performance of the specific organization prevents other people from making any economic progress. This entitlement exists even if those other poeple actually do the work, and ultimately provide the money that sustains the organization.

Although the executives of not-for-profit health care organizations generally make far less than executives of for-profit health care corporations, collectively, hired managers of even not-for-profit health care organizations have become richer and richer at a time when most Americans, including many health professionals, and most primary care physicians, have seen their incomes stagnate or fall. They are less and less restrainted by passive, if not crony boards, and more and more unaccountable. In a kind of multi-centric coup d'etat of the hired managers, they have become our new de facto aristocracy.

Or as we wrote in our previous post, executive compensation in health care seems best described as Prof Mintzberg described compensation for finance CEOs, "All this compensation madness is not about markets or talents or incentives, but rather about insiders hijacking established institutions for their personal benefit." As it did in finance, compensation madness is likely to keep the health care bubble inflating until it bursts, with the expected adverse consequences. Meanwhile, I say again, if health care reformers really care about improving access and controlling costs, they will have to have the courage to confront the powerful and self-interested leaders who benefit so well from their previously mission-driven organizations. It is time to reverse the coup d'etat of the hired managers.

1 comment:

Anonymous said...

Well-said...the 'financification' of America is ruining our entire economy, not just the healthcare sector.