Controversy driven by bonuses paid out to MetroHealth System's former CEO has intensified criticism of hospital CEO pay at large, with one former MetroHealth physician calling for it to be capped at $800,000 — twice as much as the U.S. president earns.
"A MetroHealth physician friend of mine says that we need to view health care as a public service rather than as a profit-oriented industry. Makes sense," Kenneth Frisof, MD, wrote in a letter to the editor of Cleveland.com, an affiliate of The Plain Dealer newspaper. "And, as part of that, let's cap hospital system CEO salaries at $800,000, twice the salary of our most powerful public servant, the president of the United States."
Since 2001, U.S. presidents have earned a $400,000 annual salary with an additional expense allowance of $50,000.
Dr. Frisof previously practiced as a family medicine physician with Cleveland-based MetroHealth before retiring. He said he is upset by recent events related to executive pay at the county-owned, safety-net health system. President and CEO Akram Boutros, MD, was fired Nov. 21 after the board received findings of a probe into compensation issues involving more than $1.9 million in supplemental bonuses. The system's board chair said that between 2018 and 2022, Dr. Boutros authorized the compensation for himself, without disclosure to the board.
Dr. Boutros alleges board retaliation. He also filed a lawsuit against the board and board Chair Vanessa Whiting, alleging violations of Ohio's Open Meetings Act and the board bylaws. The lawsuit asks the court to nullify Dr. Boutros' termination for cause.
Misappropriations of pay in any health system C-suite tend to ignite criticism of executives' earnings industrywide, particularly when health systems are looking to cut costs amid thinning margins and front-line employees seek raises. Earlier in the pandemic, as hospitals and lawmakers urged federal authorities to investigate travel staffing agencies for price-gouging, some travel nurses reciprocated and said such scrutiny should actually be redirected toward health systems' executive pay.
Some argue that competitive compensation packages are needed to attract and retain top executive talent, the scope and responsibilities of leading a modern-day hospital or health system are larger than ever, and the skills and talent to lead such organizations are specialized and niche.
Regardless of whether one sees executive pay as appropriate or too high, its variation across settings is real. A 2022 analysis by the Lown Institute of more than 1,000 hospitals found the gap between hospital CEO pay and average worker pay varied widely, with some CEOs paid twice the rate of other workers, while the highest paid received 60 times the hourly pay of general workers. Hospitals in urban settings and those that held teaching status were associated with higher executive hourly compensation compared to general worker wages.
Across all industries, CEO pay has catapulted in recent years. From 1978 to 2021, CEO pay based on realized compensation grew by 1,460 percent. In 2021, the average CEO earned $27.8 million. Setting an all-time record, CEOs in the U.S. earned 399 times more than the typical worker in 2021, CEO pay continues to spike, according to a report from the Economic Policy Institute.