Non-Profit Hospitals and CEO Salary

Posted on February 1, 2008 by Dr. David Edward Marcinko MBA

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The Connecticut State Challenge

[By Staff Writers]Doctor Scrubs

The state of Connecticut has 31 hospitals that are economically struggling.

The Report 

In fact, according to a 2006 report – led by Governor M. Jodi Rell – more than half of the state’s non-profit hospitals ran deficits while the rest generated below-adequate surpluses. Financial help has been slow from the state’s insurance programs. 

The Findings 

And so, the question raised by the state task force was whether these same hospitals should be paying CXOs steadily increasing salaries?

Examples: 

  • Salaries paid to top CEOs at the state’s hospitals grew 95 percent between 2002 and 2006, with some topping $1 million.
  • Hartford Hospital President and CEO John Meehan made just over $1 million in 2006, up 27 percent from 2002.
  • The salary of Robert Kiely, CEO of Middlesex Hospital in Middletown, climbed 82 percent, from $511,220 in 2002 to $932,923. 

Assessment 

In their defense, the hospitals stated they must compete with national salary levels to recruit top talent. And so, what is your opinion on the matter; is there a dichotomy between medical-mission and personal profit-margin?

Conclusion

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7 Responses

  1. Raymond, on February 5, 2008 at 6:27 PM said:

    Rand Report

    A new study from the Rand Corporation and the University of Southern California suggests that state hospitals in California collect more from the uninsured than they do on-average from government payers.

    Now is anyone still surprised?
    -Raymond

    Like

  2. Executive-Post, on February 7, 2008 at 5:09 PM said:

    Non-Profit Credit Ratings

    Did you know that a new report concludes that quality incentives could potentially translate into a credit-rating boost for not-for-profit hospitals?

    According to Moody’s Investors Services, when hospitals work to improve quality, it can result in improved operations, higher patient volume and market share, better rates from health plans and ultimately, an improved economic and financial managerial picture.

    Now, is anyone surprised over this organizational behavior conclusion?
    -Executive-Post

    Like

  3. Executive-Post, on April 13, 2008 at 8:02 PM said:

    Not-for-Profit Hospital Success

    Did you know that according to a December 2006 Congressional Budget Office report, U.S. not-for-profit hospitals get $12.6 billion in tax exemptions and $32 billion in federal, state and local subsidies?

    That’s a lot of money, of course, though it is acceptable if they use it to fulfill their charitable missions. But, some critics contend that some hospitals spend less on charity care than they’re receiving in benefits; especially according to vocal and visible critic Senator Chuck Grassley (R-IA) who has been on a mission to force not-for-profit accountability.

    During tax season, as these hospitals complete their first Schedule Hs for Form 990, critics will at least have a better idea of where the money is going, and that will hopefully defuse some bad feelings.

    Incidentally, do all Executive-Post readers understand why IRC Schedule H, Form 990, is so dreaded in the sector? Please advise.

    -Debra

    Like

  4. Executive-Post, on April 21, 2008 at 12:37 AM said:

    Hospital Uninsured Collections

    Did you know that according to a report by RAND and the University of Southern California [USC], hospitals collected on average 18% more of their charges from uninsured patients, than from Medicare for the period 2001-2002? And, from 2004-05 they also collected 20% more on average, as reported by Health Affairs.

    Now, do we understand how all those handsome CEO salaries are paid? Please opine.

    -Jack

    Like

  5. Dave, on January 6, 2009 at 10:59 AM said:

    Telescopic Philanthropy

    Considering the financial mismanagement and extreme revenue seeking tactics of many not-for-profit hospitals today, much like Mrs. Jellyby the misguided do-gooder in Charles Dickens’s “Bleak House”, some practice a form of “telescopic philanthropy” [first termed by Richard Oastler; in 1727].

    You recall, she was the character who neglected her chaotic family to devote time to improving conditions in distant Borrioboola-Gha, Africa. This is akin to some charitable CEOs showing a tendency to neglect the crying needs of those patients around them.

    In other words, charity should begin at home.

    Dr. Marcinko

    Like

  6. Hope, on February 25, 2009 at 10:18 PM said:

    Greetings Ray, Debra and Jack,

    As long as CEOs control their BODs, there are no incentives for directors to reduce their salary.

    IOW: When Warren Buffett allegedly admitted that he knowingly voted for excessive compensation because collegiality trumped independence, the system will continue to award excessive pay to CEOs, and hospitals will not be immune.

    Best.
    Hope
    [www.HealthcareFinancials.com]

    Like

  7. Clem, on December 20, 2014 at 12:13 PM said:

    From the E.R. to the Courtroom
    [How Nonprofit Hospitals Are Seizing Patients’ Wages]

    According to Paul Kiel, ProPublica and Chris Arnold NPR, one Missouri hospital has sued thousands of uninsured patients who couldn’t pay for their care, then grabbed a hefty portion of their paychecks to cover the bills.

    “We will be paying them off until we die,” one debtor said.

    http://www.propublica.org/article/how-nonprofit-hospitals-are-seizing-patients-wages?utm_source=et&utm_medium=email&utm_campaign=dailynewsletter&utm_content=&utm_name=

    Clem

    Like

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