Report: Non-Profit CEOs Make Plenty

Posted on October 2, 2012

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One of the traditional knocks on non-profit healthcare’s financial woes is that ‘they don’t run themselves like a business.’ I can only speak to the operational aspects, indirectly, through my lens as a designer and consultant. Sure, there are challenges, but a lot of improvement and progress is happening as well, particularly since PPACA.

However, when it comes to CEO compensation, I would say Wall Street has nothing on non-profit healthcare.

Becker’s published the Top 25 Grossing Non-Profit Hospital CEO Compensations, and remuneration is far from lacking. This list has many of the industry “all-stars”, i.e. some of the largest and most well-known national healthcare institutions.  The CEOs of these organizations are the New York Yankees, Los Angeles Dodgers and St. Louis Cardinals of the non-profit healthcare world.

Take note, though, with the baseball analogy:  compensation only takes an organization so far.  The Yankees are high-profile, spend a lot of money, and are likely to make the playoffs when the regular season ends on Wednesday.  The St. Louis Cardinals are competitive every year, with an established pedigree, make prudent but not lavish deals, and are likely headed to the playoffs as well.  The Los Angeles Dodgers, who rival the biggest spenders, sell a lot of gear, and traded for some expensive, marquee talent at the trade deadline, likely will not make the playoffs. 

And how does the healthcare market accommodate for the Oakland Athletics of the healthcare world:  the lean non-profit with an efficient business bent that maximizes returns yearly on relatively minimal, small-market revenue?  One could argue that these CEOs should be paid the most, since hospitals are now in an outcomes-based reimbursables mode; it only follows their CEOs should be as well.  Like the Yankees and Dodgers, Cardinals and A’s, it is how you manage what you have that determines whether a CEO really earns the big bucks, and is worth what she is paid.

Even then, in healthcare as in professional sports, when is ample gross compensation simply…gross?  $997,000 (Loma Linda Univ. MC)?  $2.5 million (Mass. General)?  $9.72 million (Northwestern Memorial)?  One Top 25 CEO receiving 10x another’s already generous salary?  Some of these numbers should elicit CEO-Board of Director discussion on “value”, “mission” and “non-profit”.

I am no industry wonk or efficiency expert—just a healthcare architect observer (who believes in the free market by the way) and has a desire for all-around improvement.  So worry not, general public, a.k.a. patients.  All-star or not, leadership at your local hospital is most likely well-taken care of.  When you visit, you should be, too.  As healthcare reform takes effect, let’s hope it trickles every which way—especially up—at least a little bit.

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