Over the past few weeks several reports about the compensation of top executives of US non-profit hospitals and hospital systems have appeared. So it is time to do our latest round-up of incessantly buoyant hospital executive compensation, and argumentative hot air that seems to fuel it. I will first summarize the latest cases in alphabetical order by state, and then examine some common justifications for the seemingly anti gravitational nature of executive compensation in this part of health care.
On AZCentral.com was an article about the CEO of a single relatively small public hospital system:
The leaders of Maricopa County’s public health-care system agreed to raise chief executive Betsey Bayless’ pay by 33 percent, bringing her salary to $500,000.
That may not seem like a lot of money as executive compensation goes, but consider the context:
The Maricopa Integrated Health System is a public hospital system that provides care for the Valley’s poor and uninsured. It is funded by federal and state health-care dollars and a special county levy paid by all county property-tax payers.
MIHS budgeted $3.5 million for market adjustments and merit raises for its employees in fiscal 2013. Bayless’ salary increase alone will consume one-quarter of the $500,000 the board had allocated this fiscal year to bring all employees’ pay in line with similar positions elsewhere.
The health-care system’s rank-and-file employees have received annual merit-based salary increases of no more than 2.9 percent since fiscal 2008.
Nonetheless, the CEO did not exactly feel rich:
Bayless said she did not request the raise and was not expecting it. She said she believes MIHS employees will understand that her salary has been comparatively low and that her replacement likely will be brought in at an even higher salary.
She justified her pay by comparing it to what she thought the market would bear.
'Any salary information will show you that my salary is always the lowest of any (hospital) CEO currently in the entire state, even the little-bitty hospitals,' Bayless said. 'On any measure, 375 (thousand dollars) is below market. So, do I feel undercompensated? I don’t know. But on any measure, it always comes in below market.'
Members of the hospital system's board also justified the pay on the grounds that it was at the market rate:
[Board Members Mary] Harden and [Terence] McMahon said they voted for the pay raise because a national search firm hired to find Bayless’ replacement set $500,000 as a minimum competitive salary for qualified candidates.
Another board member also noted how hard CEO Bayless works:
'The lady works 70-plus hours a week. She’s on call 24/7. So, I think the job warrants it. She works very, very hard,' Dewane said.I am sure health care professionals who also work long hours, and are frequently on call, but unlike managers, have to make decisions with real life and death consequences would understand, or not.
In California a report focused in contrast on the bigger hospitals and hospital systems. California Healthcare News reported on the best compensated hospital executives in the state. In general,
More than one in five non-profit hospital chief executive officers in California received compensation totaling $1 million or more in 2010, according to a new pay survey by Payers & Providers.
Altogether, 32 CEOs of the 154 surveyed received pay packages that ventured into the seven figures. That compares to 19 CEOs who received seven-figure pay packages in the only prior survey Payers & Providers conducted. That survey was published in June 2010, and relied primarily on data from 2007 and 2008.
Some specifics about the best paid executives:
Kaiser Permanente's George Halvorson is the most highly-compensated hospital system executive in California, receiving $7.74 million in 2010. That included more than $6 million in additional compensation. Halvorson is retiring as Kaiser's CEO in June.
Thomas Priselac, the chief executive officer of Cedars-Sinai Medical Center in Los Angeles, was the highest-paid standalone hospital CEO, earning $2.77 million in 2010. That included additional compensation of $1.6 million.
The article provided the justification for Priselac's seven-figure compensation:
According to an email response from Cedars-Sinai spokesperson Duke Helfand, Priselac's compensation 'reflects the top-tier clinical, research and educational performance the medical center consistently has delivered in his 19 years of leadership.'
He did not offer how this performance was measured, how it compared to that of any other hospital, or whether anyone other than the CEO might have been responsible for that performance.
The survey results included the best compensated CEO of a health-district
Michael Covert, the CEO of the two hospital Palomar-Pomerado Health system in San Diego County, was the highest-paid district hospital CEO, earning $1.09 million in 2010. He was among two district hospital CEOs to earn seven-figure compensation.
The survey results also included the best compensated CEO for academic medical centers run by the (state supported) University of California:
David T. Feinberg, M.D., is by far the highest-paid CEO among those who oversee the five research hospitals operated by the University of California. Feinberg, who runs Ronald Reagan UCLA Medical Center, earned $1.33 million in 2010 – the only seven-figure pay package among that cohort of CEOs, and nearly $450,000 more than the second-highest earner in that group, Mark Laret of UC San Francisco Medical Center.Connecticut
Becker's Hospital Review provided information on the highest paid Connecticut hospital CEOs:
Here are the nine CEOs who earned at least $1 million in 2011.
• Clarence Silvia, The Hospital of Central Connecticut: $2.76 million
• Marna Borgstrom, Yale-New Haven Hospital: $2.59 million
• Brian Grissler, Stamford Hospital: $2.24 million
• Elliot Joseph, Hartford Hospital: $1.74 million
(*CEO is now Jeff Flaks)
• Frank Corvino, Greenwich Hospital: $1.71 million
• Susan Davis, RN, Saint Vincent's Medical Center: $1.48 million
• Chris Dadlez, Saint Francis Hospital and Medical Center: $1.42 million
• John Murphy, MD, Danbury Hospital: $1.08 million
• Christopher O'Connor, Hospital of Saint Raphael: $1.04 million
The report did not provide any justification for the pay levels, and I could find no further news coverage that was relevant.
The Fitchburg (MA) Sentinel and Enterprise seemed to be the only media outlet which noted the compensation of hospital executives reported to the state attorney general. It listed compensation of some regional hospital leaders,
Patrick Muldoon, president and CEO of HealthAlliance Hospital, a member of the UMass Memorial Health Care system, received a compensation package of $653,868 in 2010, the most recent year for which compensation data is publicly available.
The HealthAlliance system includes a 135-bed community hospital with services on two campuses in Leominster and Fitchburg.
Over that same period, Daniel P. Moen, former president and CEO of the 153-bed Heywood Hospital in Gardner, received a compensation package of $386,126.
Christine Schuster, CEO of Emerson Hospital in Concord, earned a total compensation package of $669,844. Emerson has 179 beds.
Lahey Clinic chief executive Howard Grant, who oversees a facility with 317 beds, was paid a total compensation package of $768,568 in 2010.
It listed the following compensation information for other executives:
Other big hospital administrators’ salaries, 2011
* $552,556.33 — Debra Carey, vice president
* $357,379.26 - Grace Wong, vice president
* $334,072.19 — Ivan Lisnitzer, vice president
* $312,182.24 — Paul Davis, assistant vice president
* $286,954.51 Renee Poncet, vice president
This should be viewed in the context of the medical center's current dire straits:
SUNY Downstate — which has a hospital and medical school in East Flatbush — is in such bad financial shape it could go broke by March, SUNY chairman Carl McCall has said.
As we have shown again and again, the pay of top health care leaders seems to endlessly increase, without clear justification, regardless of the vicissitudes affecting the organizations they lead, their employees, their patients and society. This suggests that health care organizations, like many other organizations, seem to be run primarily for the benefit of their executives and their cronies, regardless of what happens to anyone else.
As we have frequently said, current policies about paying hired health care managers leave the managers unaccountable for the effects of their actions on patients' and the public's health, and worse, fail to deter and may even encourage ignorance of the health care mission, frankly mission-hostile behavior, self-interest, conflicts of interest, and outright corruption. Meanwhile, paying nearly all top managers as if they were brilliant, while setting much harsher standards for the employees who actually take care of patients, including health professionals, demoralizes those on whom patients actually depend for care.
As we have said endlessly,.... Health care organizations need leaders that uphold the core values of health care, and focus on and are accountable for the mission, not on secondary responsibilities that conflict with these values and their mission, and not on self-enrichment. Leaders ought to be rewarded reasonably, but not lavishly, for doing what ultimately improves patient care, or when applicable, good education and good research. On the other hand, those who authorize, direct and implement bad behavior ought to suffer negative consequences sufficient to deter future bad behavior.
If we do not fix the severe problems affecting the leadership and governance of health care, and do not increase accountability, integrity and transparency of health care leadership and governance, we will be as much to blame as the leaders when the system collapses.