What do the highest-paid nonprofit hospital CEOs have in common?
Nonprofit hospitals have been in the news for paying their executives millions amid layoffs and decreasing community investment. Why do nonprofit hospitals and systems pay their CEOs so much, and which organizations are paying the most? We took a look at the ten highest-paid hospital and system CEOs from 2021 in the Lown Hospitals Index to learn more.
Highest-paid nonprofit hospital CEOs, FYE 2021
| Hospital (state) | CEO | Total compensation | Notes |
| Froedtert Pleasant Prairie Hospital (WI) | Richard Schmidt Jr | $7.5 million | Tax ID 390816845 Includes deferred compensation returns paid out in fiscal year 2021 |
| Covenant Medical Center Harrison (MI) | Edward Bruff | $5.2 m | Tax ID 383369438 Includes deferred compensation from retirement plan |
| Cooper University Hospital (NJ) | Anthony Mazzarelli, Kevin O’Dowd | $4.9 m | Tax ID 210634462 Includes compensation for two co-ceo/presidents who served this year |
| Grady Memorial Hospital (GA) | John Haupert | $4.1 m | Tax ID 262037695 Includes retirement plan payments |
| Walnut Creek Medical Center (CA) | Jane Willemsen | $4.1 m | Tax ID 941461843 Includes payments from supplemental executive plan. Willemsen is also CEO of John Muir Concord Hospital. |
| UChicago Medicine (IL) | Thomas Jackiewicz, Sharon O’keefe | $3.6 m | Tax ID 363488183 Includes compensation for two CEOs who served this year. Includes supplemental executive retirement plan payouts to Sharon O’Keefe |
| White Plains Hospital (NY) | Susan Fox | $3.6 m | Tax ID 131740130 $1.25M is bonus/incentive compensation |
| Atrium Health Wake Forest Baptist Medical Center (NC) | Julie Freischlag | $3.5 m | Tax ID 560552787$1M is bonus/incentive compensation. Freischlag was also dean of Wake Forest University School of Medicine during this time. |
| Westchester Medical Center (NY) | Michael Israel | $3.4 m | Source: https://www.seethroughny.net/payrolls |
| University Hospitals Cleveland Medical Center (OH) | Eric Beck, Daniel Simon | $3.4 m | Tax ID 900059117 Includes compensation for two CEOs who served this year |
Highest-paid nonprofit system CEOs, FYE 2021
| Hospital system | CEO | Total compensation | Notes |
| Sentara Healthcare | Howard Kern | $33.2 m | Tax ID 521271901 Includes distributions from Supplemental Executive Retirement Plan |
| CommonSpirit Health | Kevin Lofton, Lloyd Dean | $32 m | Tax ID 470617373 Includes compensation for Kevin Lofton, former CEO |
| Nuvance Health | John Murphy | $30.1 m | Tax ID 834214573 Includes distributions from Supplemental Executive Retirement Plan |
| RWJBarnabas Health | Barry Ostrowsky | $17.3 m | Tax ID 222405279 Includes distributions from Supplemental Executive Retirement Plan |
| CHRISTUS Health | Ernie Sadau | $17 m | Tax ID 760590551 Includes retirement compensation |
| Kaiser Permanente | Gregory Adams | $15.6 m | Tax ID 941105628$10.6M is bonus/incentive payments |
| Mercy Health (Missouri) | James Britton | $15.3 m | Tax ID 431423050 Includes distributions from Supplemental Executive Retirement Plan |
| Ascension Healthcare | Joseph Impicciche | $13 m | Tax ID 311662309$10.8M is bonus/incentive compensation |
| NYU Langone Health | Robert Grossman | $12.7 m | Tax ID 133971298 Includes compensation as Dean of NYU School of Medicine |
| Banner Health | Peter Fine | $12.4 m | Tax ID 450233470 Includes payouts from long-term incentive plan |
Bonus pay and other incentives
In order to recruit and retain talent, nonprofit hospital boards have included incentives for executives such as supplemental retirement plans and long-term incentive plans, which contribute to the high payouts for many of these hospitals in 2021.
Other executives received multi-million dollar bonuses or incentive payments, although the metrics behind those incentives can be vague. For example, Ascension’s tax form does not include how CEO incentive pay was structured, despite their CEO receiving more than $10 million in bonuses that year. White Plains Hospital Medical Center’s tax form is low on details for incentive pay, writing that bonuses were “based on the individual’s performance and accomplishments as determined by either the Compensation Board or management discretion.” Kaiser’s tax form has more information on incentives, including “quality of care and service, membership growth, operating income, per member expense trend, and community benefit” as organizational goals for potential bonuses.
Compensation consultant trend
Some of these hospitals also mention the use of “independent compensation consultants” in the process of creating compensation plans for executives. Of the hospitals and systems with the highest total compensation in 2021, all of them with Form 990s available indicate that they used a compensation consultant “to establish the compensation of the organization’s CEO/Executive Director.” The increasing prevalence of consultants could be a factor in driving up CEO pay for nonprofit hospitals, as it has in other industries.
Variation in CEO pay
However, not all hospital CEOs get paid astronomical amounts, even similar-sized organizations in the same regions. The CEO of UVA Health system in Virginia made a little over a million dollars, compared to $33 million for Sentara’s CEO. In the White Plains, New York area, the CEO of Phelps Hospital and St Luke’s Cornwall Hospital made less than a million dollars, compared to the CEOs of White Plains Hospital and Westchester Medical Center, both of whom made more than $3 million that year. And in Wisconsin, several hospitals with patient revenue similar Froedtert Pleasant Prairie Hospital paid their CEOs less than $1 million in 2021, including SSM St Mary’s Hospital and St. Vincent Hospital.
Leading a hospital system is not an easy job, but when the CEO is making more than 1,000 times as much as the housekeeping staff, it’s worth asking what we get for such high CEO compensation.