Friday, July 6, 2012

Study: Nonprofit Hospital CEO Pay Doesn't Affect Quality Of Care

A study by the New Hampshire Center for Public Policy Studies (NHCPPS) found that there is no correlation between the quality of care at nonprofit hospitals and the pay of their CEOs.

The Bangor Daily News today reported on the study that showed that the size of a CEO's compensation package correlated closer with the size of their hospitals rather than the quality of its charitable care. For example, the head of Lebanon, N.H.-based Mary Hitchcock Memorial Hospital -- $1.1 billion in revenue -- made $785,000 in 2009, while the CEO of Colebrook's Upper Connecticut Valley Hospital -- $15 million in revenue -- made a comparably smaller $150,000 that same year.

New Hampshire Attorney General Michael A. Delaney, who hired NHCPPS to determine how CEO pay has changed in the state's 23 nonprofit hospitals, said in a statement that “Given these hospitals exist to provide quality health care and are required to provide community benefit and charitable care in light of their non-profit status, the lack of such a correlation is a significant concern."

Rather than just relying on public Internal Revenue Service (IRS) filings, NHCPPS also made use of internal hospital records including CEO employment contracts, board minutes, executive memos, and W-2 forms from 2005 to 2010.

The study found that all of the nonprofit hospitals in the state met IRS standards for executive pay, except for a few instances. Three of them didn't provide written records from board meetings where CEO compensation was a topic, and two smaller institutions didn't use pay at similar hospitals as a benchmark for their executives.

You can read the full story in The Bangor Daily News.

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