Housing, retirement, and other perks for hospital CEOs
By Judith Garber and Noelle Serino
In recent years, hospitals have garnered increasing attention for their generous CEO salaries. While most nonprofit CEOs make between $100k-$200k on average, hospital CEOs make $600k on average, making them an outlier in the nonprofit space. Some hospital CEOs made millions or even tens of millions in recent years.
In particular, perks for nonprofit hospital CEOs – such as payments for housing or supplemental retirement plans – show how nonprofit hospitals may be following the lead of corporations when it comes to compensation packages.
Housing help for CEOs
The Fresno Bee recently highlighted the $5.1 million payout for Valley Children’s Hospital CEO Todd Suntrapak, which is higher than the compensation for other similarly-sized children’s hospitals.
Now they’ve uncovered another benefit for Suntrapak. According to the hospital’s 2022 tax filings, the CEO essentially doubled his compensation in the form of a $5 million “loan for residence in lieu of other compensation.” The same year he received this loan, Suntrapak purchased a $6.5 million beach house three hours away from the hospital, although it is not clear whether this loan was used to buy the house. The chair of the hospital’s Board of Trustees wrote to the Fresno City Council that such loans are “not at all unusual as a retention tool,” and that Suntrapak would have to pay back the loan if he leaves Valley in the next ten years.
“In the for-profit world, in the big corporate world and Wall Street, this is sort of standard practice” and called it “a remarkably attractive perk.”
Dr. Vikas Saini, Fresno Bee
Valley Children’s Hospital is not alone among nonprofit hospitals in offering their CEO benefits for housing. Norman Regional Hospital Authority in Oklahoma bought the house of their CEO at $147,000 above its market value, so he could purchase another closer to the hospital. And Ohio-based Kettering Health Network allegedly spent more than $1 million to purchase and repair a new home for their CEO.
Extra retirement benefits
Another common type of CEO compensation at hospitals is the “supplemental executive retirement plan,” or “SERP.” A SERP is a deferred compensation plan that acts as an incentive for top executives to stay at a company long term. These are non-qualified plans, so they allow more in annual contributions than the maximum amounts limited under 401(k) plans. Most often these plans are funded through cash value life insurance, in which the company pays the premiums and then uses the cash value to later pay the executive. Generally the amount is paid out in a lump sum once the executive is vested, depending on the plan terms.
For example, the CEO of Sentara Health System in Virginia, received $33 million in 2021, most of which was from the payout of his SERP. Similarly, the CEO of Nuvance Health in Connecticut received $23 million from his SERP in 2021, raising his total compensation to $30 million for that year.
The impact of competition
Why are nonprofit hospitals offering their CEOs these perks, even on top of high salaries in some cases? Nonprofit hospitals are competing for talent, not only with other nonprofits, but with for-profit hospitals as well. This pushes up compensation into a higher realm.
Hospital boards consider how much to pay CEOs and how to structure their compensation plans based on comparisons with other peer hospitals. As hospitals pay their CEOs more, it creates an upward spiral in which this raises the threshold that other hospitals have to match. And because nonprofit hospitals don’t offer stock options, they may use SERPs, housing bonuses, and other benefits to attract top talent and keep them longer.
Running a hospital is a tough job and it’s important for hospital boards to recruit the best leaders they can. But as hospital CEO pay starts to resemble that of for-profits more than nonprofits, transparency about how we are paying CEOs and what we are incentivizing is key. As Dr. Vikas Saini said in the Fresno Bee, “We don’t pretend to know the ‘right pay’ for a hospital CEO, but we do think it’s reasonable to ask, what’s it for?”