Massachusetts Hospital CEOs Cash In

In Time to Heal, Kenneth Ludmerer traced the evolution, if that is the right word, of the academic medical center from a relatively "flat" organization dedicated to service and academics to a large, complex quasi-corporation. Ludmerer wrote:

The new hospital administrators assumed business titles (president or chief executive officer rather than superintendent or director), demanded and received corporate levels of compensation, and retained hordes of management consultants.... A corporate approach began to dominate the institutional culture of the academic medical center.... It became increasingly difficult to distinguish some academic medical centers from the for-profit hospital chains and HMOs they so often criticized.

Christopher Rowland, reporting in the Boston Globe last week, documented the latest step in this process. It seems that nearly every CEO of a Boston "not-for-profit" hospital got at least $1 million in total yearly compensation in fiscal 2005. The article reported the following amounts of total compensation:

• James J Mongan, CEO of Partners HealthCare received $2.1 million in total compensation, up 10.5% from $1.9 million the previous year;
• Peter Slavin, Massachusetts General Hospital, $1 million, up 13.1% from $0.884 million;
• Gary Gottlieb, Brigham and Women's Hospital, $1 million, up 6.9% from $0.935 million;
• Elaine Ullian, Boston Medical Center, $1.37 million, up 54% from $0.886 million;
• John O'Brien, UMass Memorial Medical Center, $1.27 million, up 37% from $0.922 million;
• David M Barrett, Lahey Clinic, $1.25 million, up 32% from $0.945 million;
• Mark R Tolosky, Baystate Health, $1.24 million, from $1.03 million;
• James Mandell, Children's Hospital Boston, $1.07 million, up 9.9% from $0.979 million;
• Ellen Zane, Tufts-New England Medical Center, $1.05 million, who stared part-way through the previous year;
• Paul Levy, Beth Israrel Deaconess Medical center, $1 million, up 4.5% from $0.957 million.

Robert Haddad, Caritas Christi Health Care, just missed the million mark. He only got $0.933 million. Haddad, of course, was forced to resign his position at Caritas Christi after allegations of sexual harassment surfaced (see post here).

Note that both Zane and Ullian split their allegiances to their hospitals with their fiduciary duties on boards of directors of public for-profit health care corporations whose interests may conflict with those of their hospitals. Zane was recently appointed to the board of Parexel, the contract research organization that administered the disastrous TGN 1412 trial (see most recent post here). Ullian is on the boards of ThermoElectron, Valeant Pharmaceuticals, and Vertex Pharmaceuticals.

The rationale for the amounts received by the CEOs and the often considerable increases from the previous year were what one would expect. The Chairman of Partners (and of the board's compensation committee) reportedly asserted "Partners HealthCare and its member hospitals want to pay Mongan and other chief executives enough to keep them from being lured away by competitors and private industry." Furthermore, "Just because the hospitals are nonprofit doesn't mean they can afford second-class leadership. I really feel we're doing the right thing by paying these guys top dollar in the field." The Chair of the Boston Medical Center board said in a similar vein, "We wouldn't want someone to swoop in here from Cleveland and offer her [Elaine Ullian] three times the salary." A spokesperson for UMass Memorial "said O'Brien's compensation package is comparable to what top executives at other hospitals receive."

How quaintly old-fashioned seems the notion that leading a non-profit hospital is a sort of calling or community service that might inspire loyalty independent of a top-drawer corporate salary.

It seems that the boards of trustees of nearly every non-profit hospital in Boston believe they have absolutely superb CEOs who must be paid handsomely lest they be tempted to bolt out the door. Like the children of Lake Woebegone, all the hospital CEOs in Boston are considered (greatly) above average. Whether all the CEOs performed so brilliantly as to deserve their increased compensation was not further addressed in the Globe article.

The ever-increasing largesse afforded to hospital CEOs stands sharply contrasts how primary care physicians and other health professionals are paid. The average compensation given to primary care physicians fell about 10% adjusting for inflation from 1995 to 2003 (see post here.) A spokesperson for the Massachusetts Nurses Association responded thus to the compensation given the CEO of UMass Memorial, "it's obscene for him to take all that money when he's asking nurses who provide the bulk of care at that hospital to accept concessions."

A final contrast is with the extremely heavy work-load of physician trainees at these same hospitals. In JAMA this week is an article which documents how teaching hospitals have failed to reduce interns' work-loads in response to recent regulations. 15 of 16 teaching hospitals in Massachusetts, and hence nearly all of the hospitals listed above, were reported to have violated regulations restricting work shifts to no more than 30 hours, and work weeks to 80 hours, and mandating at least one day off a week during the first year the regulations were in force. (Landrigan CP, Barger LK, Cade BE et al. Interns' compliance with Accreditation Council for Graduate Medical Education work-hour limits. JAMA 2006; 296: 1063-1070.)

But since the CEOs are paid for their scintillating leadership abilities, maybe they can get around to fixing these problems this year.