That was just one interesting tidbit from a 732-hospital survey and related white paper released by Payers & Providers, a California-based health business publisher. Average nonprofit hospital CEO compensation in the region was about $481,000.
If the report contained one key piece of advice for aspiring Midwestern hospital CEOs, it’s this: Apply for a job at a children’s hospital. Of the 14 children’s hospitals in the survey (an admittedly small sample size), average CEO pay was a whopping $1.4 million.
The report pointed to several factors behind what it called “the children’s hospital bump,” including the following: A unique skill set is needed to run hospitals that not only diagnose and treat pediatric illnesses, but also operate as major research centers; children’s hospitals tend to be highly visible and popular, leading to lots of financial support from the local community; and those deep ties to the community create a need for a CEO who’s adept at handling both the community relations and business leadership aspects of a hospital.
Another intriguing nugget: The report contends that executive compensation consultants could be contributing to the inflation of hospital CEO salaries — which seems logical, given who’s hiring them — but the report disappointingly offers little evidence to support that assertion. “It seems there is a possibility that when executive compensation firms are hired by boards and/or CEOs to provide multiple examples of comparable compensation, the firms may report out the higher end of the comparables,” said Pamela Knecht, president of Accord Limited, a Chicago-based healthcare governance consulting firm, in the report.
Hospital board members who are responsible for setting executive salaries may find themselves in a difficult position — particularly as the U.S. economy looks increasingly weak, according to the report. Board members must balance their goal of recruiting top talent with the optics of million-dollar salaries that make tax-exempt hospitals relatively easy targets for legislators or public unions to complain about executive compensation run amok. Additionally, nonprofit hospital CEO salaries have also come under scrutiny in recent years by the Internal Revenue Service and Congress, particularly Iowa Republican Sen. Charles Grassley.
Surely, nonprofit hospitals wish their executive salaries wouldn’t be held under such a public microscope, but that’s the price of a tax exemption — and it’s a price that to them apparently is ultimately worth it.
Here’s a look at the top 20 nonprofit hospital CEO salaries in the Midwest, according to the Payers & Providers report. (Note that: “Because hospital fiscal years vary and because the [IRS Form] 990s are filed well after the close of the accounting year and made public even later, the most recent data are in most cases from 2008 and in some cases from 2009.”)
- Randall O’Donnell; Children’s Mercy Hospital and Clinics; Kansas City, Missouri: $6 million
- Javon Bea; Mercy Health System; Janesville, Wisconsin: $4.5 million
- James Skogsbergh; Advocate Health Care; Oak Brook, Illinois: $4 million
- Dean Harrison; Northwestern Memorial Hospital; Chicago, Illinois: $3.4 million
- Richard Pettingill; Allina Health System; Minneapolis, Minnesota: $3.3 million
- Joseph Swedish; Trinity Health; Novi, Michigan: $2.7 million
- Lowell Kruse; Heartland Regional Medical Center; St. Joseph, Missouri: $2.5 million
- Steven Lipstein; BJC Health System; St. Louis, Missouri: $2.2 million
- Kevin Schoeplein; OSF Healthcare System; Peoria, Illinois: $2.2 million
- Thomas Sieber; Genesis Healthcare System; Zanesville, Ohio: $2.1 million
- Paul Pawlak; Silver Cross Hospital; Joliet, Illinois: $2 million
- Toby Cosgrove; Cleveland Clinic; Cleveland, Ohio: $1.9 million
- William Petasnick; Froedtert Memorial Hospital; Milwaukee, Wisconsin: $1.9 million
- Fred Manchur; Kettering Medical Center; Dayton, Ohio: $1.9 million
- Patrick Magnon; Children’s Memorial Hospital; Chicago, Illinois: $1.8 million
- Kenneth Hanover; University Hospital; Cincinnati, Ohio: $1.8 million
- J. Luke McGuinness; Central Dupage Hospital; Winfield, Illinois: $1.8 million
- Daniel Evans Jr.; Clarian Health Partners; Indianapolis, Indiana: $1.8 million
- James Madera; University of Chicago Medical Center; Chicago, Illinois: $1.8 million
- James Anderson; Cincinnati Children’s Hospital Medical Center; Cincinnati, Ohio: $1.8 million