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Study: Highest-paid nonprofit hospital CEOs earn $1.6 million

Tuesday October 15, 2013
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Compensation for CEOs at nonprofit hospitals varies around the country but averaged almost $600,000 in a study of top executives at nearly 2,700 hospitals, according to a study.

Karen E. Joynt, MD, MPH, of the Harvard School of Public Health in Boston, and colleagues examined seven data sources, including publicly available tax forms for nonprofit hospitals in 2009. Their study, published Oct. 14 on the website of JAMA Internal Medicine, included 1,877 CEOs responsible for 2,681 hospitals.

The CEOs had an average compensation of $595,781 in 2009, according to the study findings. The CEOs paid the least (median compensation of $117,933) were mainly responsible for small, nonteaching hospitals in rural areas. The highest-paid CEOs (median compensation of more than $1.6 million) oversaw larger, urban hospitals that in many cases were teaching institutions.

Hospitals with high performance on patient satisfaction compensated their CEOs $51,706 more than did those with low performance on patient satisfaction. Hospitals with high levels of advanced technological capabilities compensated their CEOs $135,862 more than did hospitals with low levels of technology.

However, a hospital’s provision of charity care was not associated with CEO compensation, and there were no significant associations between compensation and a hospital’s financial performance or performance on process quality, mortality or readmission rates.

“Among the quality metrics we examined, only patient satisfaction was consistently associated with CEO compensation,” the authors concluded.

In a commentary, Warren S. Browner, MD, MPH, of the California Pacific Medical Center in San Francisco, wrote: “On the surface, [the authors’] most disturbing finding was that CEO pay correlated with patient satisfaction, but not with quality. They see this as a missed opportunity and recommend that hospital boards provide incentives for CEOs to meet quality goals. That advice seems strange, since every hospital CEO I know who receives incentive compensation already has quality-related goals.

“By contrast, patient satisfaction correlated with CEO pay, likely because the subjective experience called patient satisfaction is easy to measure, even though what it actually means is unclear.”

Study abstract: http://archinte.jamanetwork.com/article.aspx?articleid=1748832.


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