CEO salaries at nonprofit hospitals up 93% since 2005
- Salary increases for nonprofit hospital CEOs far outpaced those for surgeons, physicians and registered nurses over the past decade, jumping a whopping 93%, a new study in the Clinical Orthopaedics and Related Research shows. Average inflation-adjusted salaries for CEOs climbed from $1.6 million in 2005 to $3.1 million in 2015.
- By contrast, orthopedic surgeons saw their salaries grow an average of 26% while pediatricians’ compensation increased by 15%. Average wages for nurses rose just 3% during the period.
- Over the study period, the wage gap between CEOs and surgeons, CEOs and pediatricians and CEOs and nurses also widened — from 3:1 to 5:1, 7:1 to 12:1 and 23:1 to 44:1, respectively.
The study points to nonclinical workers as a major driver in national costs of healthcare wages, which ballooned 30% over the decade from $663 billion to $865 billion.
Whether such huge disparities in nonclinical and clinical employee salaries are justified is dubious, the researchers say.
"While our study cannot comment on the value of nonclinical workers, the growth in costs appears to outpace plausible growth in value, given the relative stagnation of healthcare utilization during the 10-year period of the study," they wrote. "It appears unlikely to us that the near-doubling of mean compensation to hospital executives is justified by the value added by their work."
Large bonuses are padding many CEOs' earnings. According to the 2018 Hospital Executive Compensation Report from Total Compensation Solutions, the average bonus for a hospital CEO is 33.2% of base salary. The report, which culls data from 1,332 hospitals nationwide, noted about three-fourths of hospitals pay their CEO a bonus. The highest was 269% of base salary.
The study highlights the huge profit-making potential of nonprofit hospitals, despite claims of financial uncertainty and distress.
According to an Axios analysis, the country’s largest nonprofit health systems reaped in more than $21 billion last year through Wall Street investments, stocks, bonds, mergers and acquisitions and credit default swaps and accounting gains.
In 2017, 84 of the largest and most successful nonprofit systems revealed total annual revenue and profits of $535.5 billion and $14.4 billion, respectively — resulting in a 2.7% operating profit margin.
But when investments on Wall Street and elsewhere were factored in, the overall profit more than doubled to $35.6 billion, or 6.7% total profit margin.
Meanwhile, a recent Medscape report shows physician compensation is rising, but so is the gender pay gap. According to the survey of 20,000 physicians across 29 specialties, overall salaries average about $300,000 today, up from $294,000 in 2017.
However, male specialists average $358.000 a year, compared with female specialists who earn $263,000 — a 36% gap. And the birth between what male and female primary care physicians earn widened by 2% to $36,000 — or $239,000 versus $203,000.
- Clinical Orthopaedics and Related Research The Growing Executive-Physician Wage Gap in Major US Nonprofit Hospitals and Burden of Nonclinical Workers on the US Healthcare System