CEO pay at hospitals above U.S. average [Winston-Salem Journal, N.C.]
(Winston-Salem Journal (NC) Via Acquire Media NewsEdge) Oct. 16--The total compensation for Forsyth County's two nonprofit hospital chief executives was above the national average as determined by Harvard researchers in a study released Tuesday.
The issue of hospital management pay has become a hot-button issue in recent years, particularly as Forsyth and Wake Forest Baptist medical centers have cut hundreds of jobs in response to regulatory changes, as well as the economic downturn and its impact on revenue, charity care and bad debt.
Critics say hospital systems use their nonprofit status for tax advantages and public-relations purposes while compensation committees justify corporate-level wages and benefits to top executives.
Supporters of corporate-style compensation levels say nonprofit hospitals need to offer attractive pay to get the best executives in a complex industry.
The Harvard study determined the mean compensation level for 1,877 nonprofit hospital chief executives was $469,096 for calendar year 2009, with a range of $106,324 to $2.1 million.
Dr. John McConnell, chief executive of Wake Forest Baptist, was paid $1.68 million in total compensation for fiscal 2009-10, including $831,288 in salary, $266,667 in bonuses and incentives, and $115,661 in other reportable compensation. He took over as the center's top executive in November 2008.
Paul Wiles, the retired chief executive and president of Novant Health Inc., had total compensation of a little more than $2 million in 2009, including $1.03 million in salary and an $836,800 bonus.
McConnell's total compensation for fiscal 2011-12 -- the latest available -- was $2.04 million. Wiles' compensation in 2011 -- also the latest available -- was $2.25 million.
"Hospital financial performance was not significantly associated with CEO compensation," the researchers said.
In the most recent Wake Forest Baptist financial report, the center reported Aug. 29 a $55.1 million operational loss in fiscal 2012-13, primarily related to the rollout of its version of the Epic electronic health records system. The center's fiscal year ended June 30. A final audited report will be released in November.
Stock investment gains of almost $54 million helped offset much of the operational revenue loss and dropped the overall loss to $571,000. Not-for-profit hospitals depend on investment income to increase their bottom line and to help pay for capital investments.
Wake Forest Baptist said in May that all executives would not receive incentive bonuses in 2013 as part of its latest cost-cutting initiative.
Novant reported Aug. 29 a 31.4 percent decrease in excess revenue to $36.4 million during the second quarter of fiscal 2013, primarily caused by lower revenue from patient services and a higher provision for bad debt.
Wake Forest Baptist said in a May statement explaining its executive compensation packages that as an academic medical center, it requires management with "a special set of skills and experience to manage relationships with physicians and researchers, the university, its patients and community.
"It takes proven talents possessed by a small group of health care executives. Compensating executives, as we do all of our employees, competitively and appropriately, is crucial to the success of Wake Forest Baptist and to Northwest North Carolina."
Novant said in May 2012 that "because we are a not-for-profit organization, our executive compensation must follow very specific checks and balances. Compensation must be considered reasonable and within an acceptable range compared to similar organizations." Novant's bonuses are based on annual and three-year goals.
"Those goals require national benchmark performance related to the quality of patient medical care we provide, employee satisfaction, patient satisfaction, finances and providing community benefit," the system said.
(c)2013 Winston-Salem Journal (Winston Salem, N.C.)
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