Hospital CEO Pay

I was doing some research and found this article that I think you will love.   It is from late last summer, but still needs to be highlighted.  It turns out that as one in five Americans with health insurance struggled to pay their medical bills in the past year, the CEOs of hospitals having been raking it in.   I know, crazy, right?  I mean what about all those meetings you went to when the CEO cried about how broke the hospital was or why they had to deny that new equipment you needed or claimed they couldn’t afford more nurses on the hospital floor.  Could they have been lying?

Some more highlights to help boil your blood:

  • In 2014 the United States spent $3 trillion on healthcare. Hospital care accounted for 32 percent of that. Around one-quarter of these costs are due to administrative overhead, according to a 2014 study published in the journal Health Affairs. This includes the salaries and benefits of hospital executives.
  • According to a report by the The New York Times, hospital executives in 2013 earned an average annual salary of $386,000. This doesn’t include bonuses or other incentives.
  • Among the CEOs of nonprofit hospitals, the average base salary in 2009 was $595,781, according to a study in JAMA Internal Medicine.

So why do these people get paid so much?  Because the system is rigged.  I was part of a dot com company in 2000 where I saw this in action.  As soon as things starting ramping up, the CEO and COO made it their first priority to have HR do research to find the “average” pay for their positions.  The goal was to get paid more and that is what happened. Now imagine if every hospital CEO did that.  It would tend to lead to an upward cycle of increased pay for them all and that is what exactly happened.  It is basically collusion. It’s not like you see when companies work together to gouge customers, but instead these guys share information and collude to fatten their wallets.

The board of directors at these hospitals are oblivious.  That is why they fall for the metric scam. Even this article talks about “a recent study conducted by Mercer and Truven Health Analytics found that nonprofit hospitals with better performance on patient quality, finance, and other measures tended to pay CEOs more.”  Now you know why you need to spend more time clicking.  To get the CEOs more pay!!

Lastly, here is a hard truth that you will never hear about.  The same study doesn’t show that paying CEOs more actually improves the hospital’s performance.  Take this information to your next hospital meeting and see how quick they fire you.


Douglas Farrago MD

Douglas Farrago MD is a full-time practicing family doc in Forest, Va. He started Forest Direct Primary Care where he takes no insurance and bills patients a monthly fee. He is board certified in the specialty of Family Practice. He is the inventor of a product called the Knee Saver which is currently in the Baseball Hall of Fame. The Knee Saver and its knock-offs are worn by many major league baseball catchers. He is also the inventor of the CryoHelmet used by athletes for head injuries as well as migraine sufferers. Dr. Farrago is the author of four books, two of which are the top two most popular DPC books. From 2001 – 2011, Dr. Farrago was the editor and creator of the Placebo Journal which ran for 10 full years. Described as the Mad Magazine for doctors, he and the Placebo Journal were featured in the Washington Post, US News and World Report, the AP, and the NY Times. Dr. Farrago is also the editor of the blog Authentic Medicine which was born out of concern about where the direction of healthcare is heading and the belief that the wrong people are in charge. This blog has been going daily for more than 15 years Article about Dr. Farrago in Doximity Email Dr. Farrago – [email protected] 

  2 comments for “Hospital CEO Pay

  1. David Taylor, MD
    February 11, 2017 at 4:16 pm

    Brill’s “The Bitter Pill” also revealed that major hospitals earn profits in the hundreds of millions of dollars, while sponsoring walk-a-thons and small donation drives, apparently designed to encourage a sense of ownership and participation in local communities that don’t realize they’re being taken for a ride.

  2. February 8, 2017 at 8:57 am

    The quality of medical care in America is, bar none, the best in the world.
    The business of medicine in America is a disaster. With the birth of an entire new type of parasite -the hospital administrative team- quality of care has been impaired, the doctor/patient relationship has suffered, doctors are leaving the art in DROVES, falsifying documentation has become routine, professional satisfaction is pathetic -reflected in part by the fact that >70% of doctors actively recommend against the field for young people, and the income and numbers of administrators -who care for no patient and produce nothing- has skyrocketed!
    When administrator pay is greater than physician pay you can guess that something is amiss.

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