Although it's normally a sensitive topic within a hospital or health system, executive compensation — especially at the not-for-profit level — has been at the forefront of public debate.
For example, Harry Jasper, administrator of the Southern Humboldt Community Healthcare District in Garberville, Calif., received a $78,000 raise from its board, causing members of the public to voice their discontent at a district meeting. This past September, members of the United Nurses & Allied Professionals criticized executives at Lifespan, a not-for-profit, five-hospital system based in Providence, R.I., after learning the nine highest-paid executives received a total of $9.4 million in compensation in 2010. Also in September, nurses at Good Samaritan Regional Medical Center in Corvallis, Ore., held an informational picket, asking they receive the same salary increases as several top executives.
While the debate is sure to not end anytime soon, the healthcare environment is repeatedly asking, "Are hospital executives overpaid, underpaid or paid fairly?" Here, three healthcare professionals offer their insight on the question that often times is easier to ask than to answer.
Jeff Barber, PhD, President and CEO, Owensboro (Ky.) Medical Health System: In order to maintain a defensible and easily justifiable executive compensation program, hospital boards should have a formal evaluation completed annually for their CEOs and the leadership team. This is true for not-for-profits especially. Most compensation professionals use the averages and highs/lows of pay grades and total compensation —including bonuses and perks — that match the job description and scope of work and complexity of position.
That being said, the majority of hospital executives are paid about right. Overpaid executives, as defined by an outside compensation consultant, present a potential risk to the non-profit classification of the hospital, and the board should practice sound corporate responsibility in this regard. Underpaid executives are either new in the position or probably have a performance problem.
The complexity, community, array of services offered and size — as in bed size — of the organization really define the hospital and drive the pay. There have been a lot of changes over the past 10 years. A lot of perk payments and IRS tax laws have pulled [compensation] in tighter.
John Maa, MD, Assistant Professor in the Department of Surgery, University of California, San Francisco Medical Center: The answer depends on your point of view.
From a business perspective, hospital executives would likely be considered as underpaid compared to the significantly higher salaries reported for private industry leaders, CEOs and corporate sector administrators. The additional benefits of private jets and cars for travel, home mortgage loan assistance, international travel for marketing, stock options, and year-end bonuses are much less common or even nonexistent for hospital executives compared with their private sector counterparts. Hospital leaders often are called upon to master a constantly evolving and wide array of medical innovations, therapies and devices.
But from a clinical perspective, many of those who work in a hospital would regard their executives as overpaid, especially given the executive's much lower risk of malpractice exposure, personal career risk and stress of the daily work they perform. The executives are removed from the clinical frontlines and rarely interact directly with the sometimes terrified, frustrated or upset patients and their families. Executives rarely are seen in the hospital on weekends, holidays or after hours and rarely venture into the very stressful environments of the operating room, intensive care units or emergency room where life and death decisions are continuously made 24 hours a day, seven days a week.
A better understanding of the daily rewards and challenges of hospital executives and administrators could prove invaluable as health reform continues to be debated in America.
H. Steven Sims, MD, Director of the Chicago Institute for Voice Care, University of Illinois at Chicago Medical Center: I think the answer to this question really lies in what we as a society determine we will value. If corporate/business profits become our prime objective, then the hospital is just another place of business, and a good CEO will turn a profit.
If, however, one rejects the notion that CEOs are job creators and returns the premium to its rightful place to reward patients and the caregivers who provide relief, comfort, and remedy, then it becomes a massive curiosity why administrators are paid better than caregivers.
How would you summarize the current climate of hospital executive and physician compensation? Becker's Hospital Review is looking for more hospital executives and physicians to share their responses. Please email Bob Herman at bob@beckershealthcare.com.
For example, Harry Jasper, administrator of the Southern Humboldt Community Healthcare District in Garberville, Calif., received a $78,000 raise from its board, causing members of the public to voice their discontent at a district meeting. This past September, members of the United Nurses & Allied Professionals criticized executives at Lifespan, a not-for-profit, five-hospital system based in Providence, R.I., after learning the nine highest-paid executives received a total of $9.4 million in compensation in 2010. Also in September, nurses at Good Samaritan Regional Medical Center in Corvallis, Ore., held an informational picket, asking they receive the same salary increases as several top executives.
While the debate is sure to not end anytime soon, the healthcare environment is repeatedly asking, "Are hospital executives overpaid, underpaid or paid fairly?" Here, three healthcare professionals offer their insight on the question that often times is easier to ask than to answer.
Jeff Barber, PhD, President and CEO, Owensboro (Ky.) Medical Health System: In order to maintain a defensible and easily justifiable executive compensation program, hospital boards should have a formal evaluation completed annually for their CEOs and the leadership team. This is true for not-for-profits especially. Most compensation professionals use the averages and highs/lows of pay grades and total compensation —including bonuses and perks — that match the job description and scope of work and complexity of position.
That being said, the majority of hospital executives are paid about right. Overpaid executives, as defined by an outside compensation consultant, present a potential risk to the non-profit classification of the hospital, and the board should practice sound corporate responsibility in this regard. Underpaid executives are either new in the position or probably have a performance problem.
The complexity, community, array of services offered and size — as in bed size — of the organization really define the hospital and drive the pay. There have been a lot of changes over the past 10 years. A lot of perk payments and IRS tax laws have pulled [compensation] in tighter.
John Maa, MD, Assistant Professor in the Department of Surgery, University of California, San Francisco Medical Center: The answer depends on your point of view.
From a business perspective, hospital executives would likely be considered as underpaid compared to the significantly higher salaries reported for private industry leaders, CEOs and corporate sector administrators. The additional benefits of private jets and cars for travel, home mortgage loan assistance, international travel for marketing, stock options, and year-end bonuses are much less common or even nonexistent for hospital executives compared with their private sector counterparts. Hospital leaders often are called upon to master a constantly evolving and wide array of medical innovations, therapies and devices.
But from a clinical perspective, many of those who work in a hospital would regard their executives as overpaid, especially given the executive's much lower risk of malpractice exposure, personal career risk and stress of the daily work they perform. The executives are removed from the clinical frontlines and rarely interact directly with the sometimes terrified, frustrated or upset patients and their families. Executives rarely are seen in the hospital on weekends, holidays or after hours and rarely venture into the very stressful environments of the operating room, intensive care units or emergency room where life and death decisions are continuously made 24 hours a day, seven days a week.
A better understanding of the daily rewards and challenges of hospital executives and administrators could prove invaluable as health reform continues to be debated in America.
H. Steven Sims, MD, Director of the Chicago Institute for Voice Care, University of Illinois at Chicago Medical Center: I think the answer to this question really lies in what we as a society determine we will value. If corporate/business profits become our prime objective, then the hospital is just another place of business, and a good CEO will turn a profit.
If, however, one rejects the notion that CEOs are job creators and returns the premium to its rightful place to reward patients and the caregivers who provide relief, comfort, and remedy, then it becomes a massive curiosity why administrators are paid better than caregivers.
How would you summarize the current climate of hospital executive and physician compensation? Becker's Hospital Review is looking for more hospital executives and physicians to share their responses. Please email Bob Herman at bob@beckershealthcare.com.
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