How much should we pay nonprofit hospital CEOs?
Hospital CEOs do not have an easy job; they’re often managing hundreds of employees and millions in revenue. But is their work important enough to warrant salaries 20 or even 60 times that of other hospital staff working on the front lines of Covid? What are we rewarding hospital CEOs for — and what metrics could we base their salaries on instead?
In an recent piece in Health Affairs Forefront, Vikas Saini, Judith Garber, and Shannon Brownlee from the Lown Institute share findings from the Lown Hospitals Index on pay equity at nonprofit hospitals.
In an analysis of about 1,000 nonprofit hospitals, the Lown Institute uncovered patterns in CEO pay:
- On average, CEOs of nonprofit hospitals made 8 times what workers without advanced degrees made– but ratios ranged from 2:1 at more equitable hospitals to 60:1 at the least equitable.
- CEOs of larger hospitals, teaching hospitals, and hospitals in urban areas had greater CEO compensation on average.
- Hospitals in certain New England and mid-Atlantic states had especially high average rates of executive compensation compared to worker wages, with Connecticut and Maryland having the highest average pay equity ratios.
- Hospitals in some Midwestern and Great Plains states had especially low rates of executive compensation compared to worker wages, like Idaho, Mississippi, and North Dakota.
In the blog, we ask not only “How much should we pay hospital CEOs” but also “What should we be paying CEOs for?” Currently, hospital CEOs are compensated for hitting financial benchmarks, which is largely driven by volume (“heads in beds”). But what if we paid hospital CEOs based on their improvement of community health, their patient inclusivity, their charity care spending, and other metrics of social responsibility?