Of course, despite these financial threats, a "spokesman" defended these payments again as market-based:
[Robert] Bellafioire defended the brigade of big salaries — though the controller’s audit suggested Downstate should consider cutting the number of high-paid administrators.
'We have to offer competitive compensation, particularly when we’re up against any number of the country’s best hospitals and medical schools just across the bridge and in the metropolitan area,' Bellafiore said.
Rural Hospitals in Upstate New York On the other hand, the Plattsburgh (NY) Press-Republican
reported on the compensation given to hospital executives in rural northern New York state. These included Alice Hyde Medical Center:
John Johnson, president and chief executive officer, was paid $339,539 in 2010. He retired in the fall of 2012.
He was replaced by Douglas DiVello, who is paid $246,682 in salary and benefits.
Then there was CVPH Medical Center in Plattsburgh
Hospital President Stephens Mundy has been at CVPH for 10 years and was paid $749,563 in salary, bonuses and other compensation in 2010.
His base salary for 2013 is $478,421,...
In addition, there was Elizabethtown Community:
Rodney Boula, president and chief executive officer at ECH, was paid $229,902 in 2010.
Note that later the article explained that this hospital has no more than 25 beds.
However, the reporter was unable to find out the compensation of the CEO of the Adirondack Medical Center in Saranac Lake:
Chandler Ralph, president and chief executive officer for 16 years, is not employed by the hospital or its umbrella organization, Adirondack Health.
She is paid through a contract with a management company, Health Tech Management Services, said Joe Riccio, AMC communications director.
Her salary is a confidential employment contract, 'just like any other vendor that does business' with the hospital, he said.
Because of that, her salary was not available through IRS records. The Press-Republican pressed Ralph to release her salary, noting that it was publishing the pay of all other area hospital CEOs, but she refused, citing confidentiality.
Parenthetically, this seems to be an unusual case of the actual outsourcing of top leadership.
This compensation information again should be considered in the context. These are all relatively small hospitals in a rural area with low costs of living. In addition, these hospitals were facing substantial financial challenges:
Numerous jobs were cut in 2012 at the area’s five hospitals, some the first substantial layoffs in decades. One hospital recorded an operating deficit, and at some, programs and services were reduced.
Adirondack Health, parent company of Adirondack Medical Center in Saranac Lake, and CVPH Medical Center in Plattsburgh, each laid off 17 employees last fall and eliminated vacant positions.
Alice Hyde Medical Center in Malone let 12 people go in September and had closed down more than a dozen vacancies.
Nonetheless, the justifications for these compensation levels included the usual suspects.In an introductory discussion not specific to any hospital, we find:
'The responsibilities of a CEO have exploded in the last four years,' said William Van Slyke of the Healthcare Association of New York State, an organization that represents hospitals and health-care systems across the state.
Similarly,
'Being a hospital CEO, you are ‘all in,’ all the time, every hour. It’s a tremendous responsibility.'
This is the familiar argument about how hard seemingly all hospital CEOs work. As noted above, it is particularly incongruous in a health care setting in which numerous health professionals are also "all in," and these professionals bear the responsibility of making decisions and taking actions that can directly affect patients' health, safety, and even survival.
Following this were the equally familiar arguments that the compensation of CEOs is determined by the market, and so to retain CEOs one must pay at this market rate:
'Being a hospital CEO, especially in the state of New York, is complex and demanding job. There is an extraordinarily limited pool of candidates, and that increases their value.'
'I can’t speak for the hospitals in your area,' he told the Press-Republican, 'but a qualified and successful CEO can go anywhere in the country and make equal or higher salaries.'
The Press Republican also elicited very similar articles justifying pay for individual hospital CEOs, for example, regarding the CEO of the Alice Hyde Medical Center, here is the "compensation is determined by the market" argument from "Dean Johnston, president of the Board of Trustees, and member of the hospital's Compensation Committee"
'It’s important that the salary is competitive with other institutions because it’s difficult to attract professional leaders who will improve the quality of care.'
And from the same person, here is the "CEOs work very hard" argument
'It’s difficult being CEO,' Johnston continued, 'because you’re the head of a complex and multi-faceted institution.'
Very similar arguments were made to justify the compensation of the CEO of CVPH Medical Center.
The Usual Talking Points and Logical FallaciesSo, to summarize, hospital executive compensation, at least such compensation that gets noted in the media, seemingly never has been better. CEOs at even the smallest, most rural, non-profit community hospitals can make well into the six figures. CEOs at public hospitals can make over half a million dollars. CEOs at larger hospitals, even those that are state supported, can make even more, up to millions a year for CEOs of moderate to large non-profit hospital systems. Even hospitals that are facing financial challenges, or that are laying off employees still pay substantial amounts.
In previous posts, we noted that whenever anyone bothers to try to justify extravagant executive compensation at hospitals, and for that matter, other health care organizations throughout the US, they seem to repeat the same set of talking points. We first listed the talking points
here, and then provided additional examples of their use
here,
here and
here. The talking points are:
- we pay what everyone else pays
- CEOs work hard and are brilliant, and so deserve high pay
- high pay is needed to attract and retain competent, if not brilliant people.
None of the examples of these talking points we have seen so far explain why these apply to CEOs and other top hired managers, but not to other kinds of employees.
So it should be no surprise that the justifications for the largesse to hospital executives found in the cases above follow the talking points yet again.
We Pay What Everyone Else Pays Another way to put this is that some market determines CEO pay. We saw versions of this to support the compensation of the CEOs of Maricopa Integrated Health System in Arizona, and SUNY - Downstate Medical Center and Alice Hyde Medical Center in New York.
Note that almost never is this argument supported by data about whether comparisons were actually made to a representative peer group. In any case, as we
asserted before, this justification may be a logical fallacy, an
appeal to common practice.
CEOs Work Hard and Are Brilliant This is an especially frequently used talking point. I have yet to see an instance in which any hospital official would omit a CEO was anything other than supremely diligent and totally brilliant. We saw versions of this to support the compensation of the CEOs of Maricopa (AZ), Cedars-Sinai Medical Center in California, the Alice Hyde Medical Center and CVPH Medical Center in New York, and generically to support all New York State hospital CEOs.
As we noted above, this justification is almost never accompanied by any evidence that CEOs work harder or are more brilliant than the numerous health care professionals who actually make it possible for the hospital to operate. I would guess it would be very hard to show that CEOs work longer hours, are under more stress, make more consequential decisions, are smarter or better trained than typical doctors, nurses and other health care professionals. This justification thus appears to be another kind of logical fallacy, an
appeal to authority.
High Pay is Needed for Retention We saw versions of this to support the CEOs of Maricopa, SUNY - Downstate, Alice Hyde, CVPH, and generically again to support all NY hospital CEOs.
Note that this justification is also almost never supported by any evidence. As we noted
here, while this argument, probably like the others, comes from the generic business management literature, there is little data in the larger business world to show that CEOs are very mobile, or likely to succeed when transplanted to a new environment. In fact, a recent report looking at the mobility of CEOs worldwide called this a "self-serving myth." (See
this summary for a link to it.)
It is too bad that no one ever seems to get the opportunity to challenge these talking points when they are offered as justifications for outlandish executive compensation.
Read more here: http://www.charlotteobserver.com/2013/02/06/3835851/charlotte-hospital-pay.html#storylink=cpy
Read more here: http://www.charlotteobserver.com/2013/02/06/3835851/charlotte-hospital-pay.html#storylink=cpy