Hospital CEO Pay Out Of Control?

Rich Doctor

Despite record unemployment and a nationwide recession, nonprofit hospital CEO pay is increasing at an accelerated rate, according to a report released last week by the New Hampshire Center for Public Policy.

The analysis of 23 hospitals indicated that CEO compensation increased 18 percent between 2006 and 2009, compared to 14 percent for hospital employees overall and 4.8 percent for all private employment. Hospital CEOs in New Hampshire earned close to half a million dollars in 2009.

On average, those totals were 18 percent higher than they were three years earlier, and the rate at which those salaries rose far eclipsed the wage increases seen by other workers.

Most troubling, the report found no link between CEO pay and hospital performance — ER wait times, infections, readmissions, mortality, etc. The only correlation found by the report was that larger hospitals tended to pay their chief executives more.

The story is similar in nearby Boston where Ralph de la Torre, former chief executive of Boston-based Caritas Christi Health Care, earned a $1.2 million increase in 2009 over his previous year’s salary, totaling $2.2 million from the Catholic hospital system in 2009, making him the best-compensated hospital executive in Boston that year.

Unfortunately, runaway hospital CEO pay is not unique to New England. Last September, the University of California hospital system approved over $1.5 million in salary increases and annual bonuses, with the majority of the stipend bump going to the management at UC Davis Medical Center.

The situation is looking more promising in the state of New York where governor Andrew Cuomo is seeking to keep annual compensation for state-funded hospital CEOs under $200,000 per year.

“These regulations are designed to ensure that New York taxpayers are protected and the public’s money is spent efficiently and effectively,” Cuomo said in a statement. “Our providers of services in New York State are the finest in the nation. To ensure public confidence in those hard-working providers that play by the rules, these regulations will allow the state government to identify and stop the few providers that pocket taxpayer dollars rather than use them to serve the public.”

Some other outrageous compensation levels are being reported at Tampa General Hospital in Florida where President and CEO Ronald A. Hytoff received $2.3 million in total compensation for the year that ended Sept. 30, 2010, ABC Action News reported.

Similarly, hospital CEO John McConnell received $2.5 million last year at Wake Forest Baptist Medical Center in Winston-Salem, N.C., The Business Journal reported.

And 18 hospital executives at Connecticut’s 30 hospitals made more than $1 million in 2009-10, the Hartford Courant reported.

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