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.


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