As freestanding children's hospitals are reporting higher profits and doling out more lavish executive compensation packages, they could be damaging the trust of their core constituents — the communities and donors, according to a Health Affairs blog post written by Martin Makary, MD, associate professor of surgery at Johns Hopkins Hospital in Baltimore.
Freestanding children's hospitals collect consistent revenue from community donors and government non-research grants. In 2009, the 10 highest-grossing freestanding children's hospitals posted more than $1.1 billion in profit, and of that total, roughly $755 million came from grants, gifts and contributions, according to the report.
CEOs of these institutions were paid 332 percent of the median salaries paid to peers at regular, full-service, acute-care hospitals with more than $500 million in revenue. Compensation was the highest for Randall O'Donnell of Children's Mercy Hospital in Kansas City, Mo. In 2009, he received almost $6 million in pay, which included retirement benefits.
Dr. Makary wrote that children's hospital donors expect their contributions to go toward patient care, not executive salaries. As such, he suggested these stakeholders demand this kind of accountability, and freestanding children's hospitals can also take the lead by implemented self-imposed models of more "reasonable" executive pay.
"While current trends threaten to erode the trust [freestanding children's hospitals] have built over decades with their employees, with government officials and with the public, these institutions face a clear choice," Dr. Makary wrote. "Meaningful reform will require a new approach to bridging the growing and dangerous divide between hospital executives and their front-line providers."
Freestanding children's hospitals collect consistent revenue from community donors and government non-research grants. In 2009, the 10 highest-grossing freestanding children's hospitals posted more than $1.1 billion in profit, and of that total, roughly $755 million came from grants, gifts and contributions, according to the report.CEOs of these institutions were paid 332 percent of the median salaries paid to peers at regular, full-service, acute-care hospitals with more than $500 million in revenue. Compensation was the highest for Randall O'Donnell of Children's Mercy Hospital in Kansas City, Mo. In 2009, he received almost $6 million in pay, which included retirement benefits.
Dr. Makary wrote that children's hospital donors expect their contributions to go toward patient care, not executive salaries. As such, he suggested these stakeholders demand this kind of accountability, and freestanding children's hospitals can also take the lead by implemented self-imposed models of more "reasonable" executive pay.
"While current trends threaten to erode the trust [freestanding children's hospitals] have built over decades with their employees, with government officials and with the public, these institutions face a clear choice," Dr. Makary wrote. "Meaningful reform will require a new approach to bridging the growing and dangerous divide between hospital executives and their front-line providers."
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