Hospital CEO Salaries: Are The Big Bucks Justified?

[TheCommuter]

CEO is a widely used acronym in the corporate world that stands for 'chief executive officer.' The CEO of a hospital or healthcare system is the top executive in charge who bears the main responsibility for the organization's comprehensive operations and performance. In other words, the hospital CEO is the man or woman (typically a male) with the ultimate authority to make the big decisions regarding the manner in which the hospital will be run. The effects of the hospital CEO's decisions trickle down to all areas of the healthcare system in which he runs and can have lasting effects.

Healthcare expenditures in the United States have been escalating for quite some time. In this current era of rising healthcare costs, members of the public have been paying close attention to the compensation packages of hospital CEOs.

The 2010 national average salary and bonus for a hospital CEO is $517,000 and $909,000 for a health system CEO, according to consulting firm Integrated Healthcare Strategies, reports Georgia Health News (Cheung, 2011).

Furthermore, many hospital CEOs earn salary packages that greatly exceed the national average. Nine percent of nonprofit hospital chief executives in the Midwest are paid more than $1 million a year, according to a new report (Glenn, 2011). Additionally, some hospital CEOs are paid multimillion dollar salaries each year.

Javon Bea, president and CEO of Janesville, Wis.-based Mercy Health System, who made roughly $3.6 million in total compensation in 2009, is defending his salary, saying it has no effect on healthcare costs, according to a Janesville Gazette report (Herman, 2011).

Are these hefty salary ranges justifiable in this day and age?

I'm assured that almost any highly paid hospital CEO would argue that certain talents and a specific skill set are required to successfully run health systems. Surely, nonprofit hospitals wish their executive salaries wouldn't be held under such a public microscope, but that's the price of a tax exemption-and it's a price that to them apparently is ultimately worth it (Glenn, 2011).

Does it make any sense to have leaders of hospitals who earn salaries that are often many times more than the other employees' pay, especially when many healthcare facilities are going out of business? It's a difficult question to answer, and we cannot reasonably expect to use simple solutions to resolve complex problems. This is just some food for thought.

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[tntrn, ASN, RN]

Salary yes, bonus.....no. Not unless that particular facility is nice, really nice to emoloyees.....and i am not talking a chrisrmas gift bought in bulk from china for a dollar three-eighty a piece with rhe hospital logo stamped on.

[Ruthfarmer]

Coming from an executive position prior to going active with my nursing license, I will definitely say our pay is well justified. Though we render the bedside care, there's a lot more that goes on throughout the healthcare system that nurses, doctors, techs, etc. will never be able to understand. When we're crunching numbers to assure the budget is sufficient enough to pay the nursing staff and maintain professional coverage, assuring there is additional aids to assist when the work load is unbearable, disputing insurance claims, being present for malpractice hearings, dealing with government inspections, guidelines, maintaining knowledge of the most recent healthcare policies, marketing the facility appropriately( not just locally but globally). I definitely think my job was more difficult then than it is now.

Bull Corn.

Executives are not doing the work in each of these areas. They have a full complement of staff handling the day to day details. There's nothing magical or mystical about the work executives do.

I can promise you that there is NOT one single thing they do that I will "never be able to understand." If there is one thing they attend to that is greater than I would ever be able to understand, then I am not fit for or capable to be a registered nurse.

That is simply ridiculous.

Taking simple situations and making them complex is not a skill to be admired. It is inefficiency and self-aggrandizing.

For example, very bad things happen when units are sorely short staffed. Conducting a study, creating a safety campaign, holding pointless committee meetings, and haranguing staff will not help. Having enough staff to do the work will solve the problem. Cutting excessive CEO pay and bonuses and using that money to fund safe and adequate staff numbers is a simple solution.

[HM-8404, BSN, RN]

How many millions of dollars a year do hospitals spend treating patients that do not pay their bills, where the hospital has to eat that cost? How many indigent patients does an ED see each year? If a patient pays their bill or not the hospital still pays the staff to treat that person. Do you think this may play a part in if a unit is short staffed or not?

[kcmylorn]

I'm not saying the old goat shouldn't be paid. But............ Not millions!!!!!!!There is NO job in a crumbling, incompetently staffed, highly litigious, high patient acuity healthcare system that should be paid that kind of money!!!!!!!!!!!!!!!!!!

These multi million dollars paydays should be as scrutinized and by the same federal agencies as medicare and medcaid fraud and abuse. Paying one employee multimillions in these economic times with the problems of our healthcare industry are having is abuse. Patient care is not being rendered because of these salaries; patients are dying and maimed due to medical oversights and omissions: drug miscalculations and omissions, for the lack of adequate staffing; novice and inexperience licensed professions with out experienced supervision( case in point: pt in California who died during the lockout), and over burdened health care pro's; due poor staffing ratios- this is extended to both doctors and nursing; patients can not access care due to these salaries( the un insured, underinsured- have been laid off or the insurance premiuims are too expensive to afford out of pocket, when these patients do access care is due to a disease state in a more acute level they seek care in an emergency room and more expensive level of care, now this patient needs to be admitted.

This bit about head hunters hired by board of trustees to seek out certain" heir apparents or wonder boys" in the corporate(CEO) world to head the healthcare system is bull. If a patient needs to go to the hospital- either is drven there by self or a family/friend member or if the EMS takes them- they ARE going to the "NEAREST ED"not the one who paid for advertising bragging rights on a highway bilboard or media ad that's all the way across town bypassing other "closer" ED's. What if the patient has to walk- doesn't own a set of wheels- is that sick patient going to walk or pay a cab fare to go further out of their way just to go to "Dream Healthcare system" and walk past the one who is not the flavor of the month? I seriously doubt it. If the lights are on, they will come! Courting these big ego wonder boys for millions is stupid, stupid, stupid, wasteful, wasteful, wasteful!!

[Ruthfarmer]

How many millions of dollars a year do hospitals spend treating patients that do not pay their bills, where the hospital has to eat that cost? How many indigent patients does an ED see each year? If a patient pays their bill or not the hospital still pays the staff to treat that person. Do you think this may play a part in if a unit is short staffed or not?

There are many components to the big picture.

Working dangerously short staffed creates life and limb threatening situations. When worse case scenarios occur, they can be disasterous for patients and their families. Let's just set the issue of needless human suffering aside. The financial cost to defend, litigate, and attempt to make these situations right is tremendous. These costs have to be met regardless of whether or not patients are paying their bills. In fact, if there are damages and a breach in the standard of care is evident, then the hospital is going to eat the cost of care any way.

My point is that no unit should be short staffed "due to the budget," if the budget provides for excessive and unreasonable compensation for the executives.

[Ruthfarmer]

I'm not saying the old goat shouldn't be paid. But............ Not millions!!!!!!!There is NO job in a crumbling, incompetently staffed, highly litigious, high patient acuity healthcare system that should be paid that kind of money!!!!!!!!!!!!!!!!!!

These multi million dollars paydays should be as scrutinized and by the same federal agencies as medicare and medcaid fraud and abuse. Paying one employee multimillions in these economic times with the problems of our healthcare industry are having is abuse. Patient care is not being rendered because of these salaries; patients are dying and maimed due to medical oversights and omissions: drug miscalculations and omissions, for the lack of adequate staffing; novice and inexperience licensed professions with out experienced supervision( case in point: pt in California who died during the lockout), and over burdened health care pro's; due poor staffing ratios- this is extended to both doctors and nursing; patients can not access care due to these salaries( the un insured, underinsured- have been laid off or the insurance premiuims are too expensive to afford out of pocket, when these patients do access care is due to a disease state in a more acute level they seek care in an emergency room and more expensive level of care, now this patient needs to be admitted.

This bit about head hunters hired by board of trustees to seek out certain" heir apparents or wonder boys" in the corporate(CEO) world to head the healthcare system is bull. If a patient needs to go to the hospital- either is drven there by self or a family/friend member or if the EMS takes them- they ARE going to the "NEAREST ED"not the one who paid for advertising bragging rights on a highway bilboard or media ad that's all the way across town bypassing other "closer" ED's. What if the patient has to walk- doesn't own a set of wheels- is that sick patient going to walk or pay a cab fare to go further out of their way just to go to "Dream Healthcare system" and walk past the one who is not the flavor of the month? I seriously doubt it. If the lights are on, they will come! Courting these big ego wonder boys for millions is stupid, stupid, stupid, wasteful, wasteful, wasteful!!

Very well said!

[kcmylorn]

Amen, Ruth-

if these corporate execs. are that concerned about staff issues maybe all they have to do is get their butts out of their ivory tower chairs and go to the STAFF and ask. It's not an Act of Congress. You are right: taking a simple situation and making it complex is not an admirible skill set- It's call spin doctoring, justifing their paycheck and probably mixed with incompetentcy, cluelessness and stupidity.

[GitanoRN, BSN, MSN, RN]

once again another enlightening article, i shall hold my opinion in this matter for a future post of my own.

[msn10]

GOODNESS!!!!!!!!!!!!!!!!!!!!! $3 million??????!?!?!?!??!? Hmmm....I wonder how many nurse salaries could be taken from this...

My thoughts exactly. I don't have a problem with CEO's making more than a staff nurse for obvious reasons; but it all has to be put into perspective.

The example of the CEO from Wisconsin making 3.6 million seems unjustified to me. He oversees 3 hospitals (not even close to the larger ones in the state) and the rest are mostly clinics or rural hospitals/medical centers. Another CEO in the state who oversees a very large hospital system makes $550,000.

Also, according to the article, the average hospital CEO makes anywhere from 500,000 to 900,000. If we make it fair and relative, my calculations would be as follows:

Pay the WI CEO an average of $775,000 and save the rest of his money ($2,825,00) and use it for RN FTE's. In Wisconsin, after salary, benefits, insurance, etc., that is another 40.5 FTE's! I think those 3 hospitals would welcome another 13.5 FTE per hospital.

[msn10]

GOODNESS!!!!!!!!!!!!!!!!!!!!! $3 million??????!?!?!?!??!? Hmmm....I wonder how many nurse salaries could be taken from this...

In fact, I bet if you took those 40+ FTE's and hired nurses into those positions with the sole purpose of enacting bed-side improvement ideas (you know - real EBC) they could reduce costs, improve efficiency, and increase patient safety more than one CEO ever could.

[kcmylorn]

msn10-

I agree. That would be one fantastic care revolution. I think you have something there!

[nursingisok]

wow this article makes me want to join a nurses union.