Dive Brief:
- According to data from 2012, the most recent year with full data available, pay packages for not-for-profit healthcare system CEOs have continue to rise at a much faster rate than average worker salaries.
- Total cash compensation grew an average of 24.2% from 2011 to 2012, according to a Modern Healthcare review of 147 chief executives. Of those 147 CEOs, 21 saw total cash compensation rise by more than 50%.
- Executives told the publication that these pay increases were necessary to retain leaders who might otherwise leave their post to accept positions with for-profit entities.
Dive Insight:
The debate over whether not-for-profit executives should receive the kind of salaries their peers in the for-profit world is hardly a new one. For decades, critics have argued that the substantial pay packages available to not-for-profit CEOs were unreasonable given that their core business is driven by a charitable mission. The not-for-profits, for their part, haven't wavered in their argument that such pay is necessary to find and keep the leaders they need.
It's worth noting, meanwhile, that CEOs of other large charitable organizations virtually never make this kind of money, according to Ken Berger, president and CEO of Charity Navigator. Berger points out that the average CEO salary for mid- to large-size public charity is around $125,000 a year, and calls not-for-profit hospital CEO salaries "off the scale." With average cash compensation for not-for-profit hospital CEOs sitting at $2.2 million in 2012, he may have a point.