Is it time to prioritize pay equity in healthcare?
How much is enough when it comes to hospital CEO pay? One physician made waves recently with his recommendation to cap hospital system CEO salaries at $800,000 per year. After all, a salary twice that of the President of the United States seems more than sufficient for someone leading an organization providing a public service like healthcare. Persistent staffing issues and the poor financial positions of many hospitals make it hard to justify more bonuses for CEOs.
The suggestion sparked more debate on the issue of hospital pay equity, which the Lown Institute measures on the Lown Hospitals Index. Here’s more on why fair pay matters, how the Lown Index measures it, and which hospitals are already leading the way on pay equity.
Why pay equity matters
In a Health Affairs blog last year, Lown leaders wrote that on average, nonprofit hospital CEOs make eight times the rate of hospital workers without advanced degrees (such as custodial staff, kitchen staff, and medical-records personnel) in 2018. However, this ratio varied widely. Some hospital CEOs were paid at twice the rate of other workers, while the highest paid received 60 times the hourly pay of general workers.
We measure pay equity on the Lown Index because it is a powerful tool for social responsibility. Hospitals are often the largest employers in the region, so by paying workers fair wages, hospitals are putting money back into their communities. Income is one of the most impactful social determinants of health. Increasing their workers’ income can dramatically improve hospital workforce’s vitality. Boosted employee morale translates to improved retention and increased engagement and productivity. Hospital pay equity truly is a triple win for the hospitals, workers, and communities they serve.
The best hospitals for pay equity
The Lown Hospitals Index for Social Responsibility measures hospital pay equity using IRS 990 filings and CMS hospital cost reports. Pay equity is measured as a ratio of CEO hourly wage to the hourly wages of hospital workers without advanced degrees. Hospitals with lower ratios receive a better grade on pay equity.
Below are the Top 10 Hospitals for Pay Equity on the Lown Hospitals Index from 2022. While most of these hospitals are very small hospitals in rural locations, the #1 hospital is MUSC Medical Center, a 400+ bed hospital in Charleston, SC. At these ten hospitals, the average CEO salary was $75,000, and the hourly wages of CEOs were about the same as those of other hospital workers.
Clearly, hospitals can both stay afloat AND pay their staff equitably, they’re not mutually exclusive. Other hospitals should take note from these institutions — especially if workforce vitality is a priority.
Top 10 Hospitals for Pay Equity
- MUSC Medical Center – Charleston, SC
- Kiowa District Hospital – Kiowa, KS
- St. Vincent’s St. Clair – Pell City, AL
- Marias Medical Center – Shelby, MT
- Falls Community Hospital and Clinic – Marlin, TX
- St. Vincents Blount – Oneonta, AL
- Mercy Hospital Cassville – Cassville, MO
- Mercy Hospital – Moundridge, KS
- Mercy Hospital Aurora – Aurora, MO
- West Holy Memorial Hospital – Atkinson, NE
Academic Medical Centers with “A” grades in Pay Equity
Smaller hospitals in rural areas are under less pressure (or have less ability to) pay their CEOs high wages. But many major teaching hospitals in urban locations are also doing well on pay equity. The following Academic Medical Centers received A grades in Pay Equity on the Lown Index in 2022.