Do Healthcare CEOs Deserve More Money Than Doctors?

Leigh Page


July 02, 2014

In This Article

The Movement to Cap CEO Pay

Although federal agencies so far have stopped short of limiting hospital CEO pay, labor unions, nurses' organizations, and politicians have been pushing hard just in the past year for concrete limits on earnings at nonprofit hospitals.

Bills introduced recently in Florida and Massachusetts call for compensation limits of $130,000 and $500,000, respectively, but they have reportedly stalled. Last year, New York Governor Andrew Cuomo signed an executive order imposing a $199,000 limit at nonprofit hospitals receiving 30% or more of their revenue from the state. However, only about eight of the 31 nonprofit hospitals in New York City reportedly meet that threshold.

This year in California, the SEIU-United Healthcare Workers West proposed a measure for the November ballot that would have limited nonprofit hospital CEOs' income to $450,000, but the union recently withdrew that measure, citing ongoing negotiations with the California Hospital Association.

The November ballot in Massachusetts, however, is expected to have a similar measure, sponsored by the Massachusetts Nurses Association. It would set the maximum compensation for CEOs of nonprofit hospitals at no more than 100 times that of the hospital's lowest-paid full-time employee. On the basis of estimates, the cap would be at about $1.6 million -- well below what eight nonprofit hospital CEOs in the state make, the nurses' group reported.

The Massachusetts Medical Society recently came out against the initiative, arguing that such benchmarks as the 100:1 ratio "have no discernible basis in science or any other objective measure."

Tom Fuller, Managing Director of Epsen Fuller Group, a search firm for hospital executives and board members, based in Mendham, New Jersey, said the Massachusetts ratio was "most peculiar," adding, "I hate to tell you, but executive pay in the United States is largely driven by supply and demand. To try to tie compensation to the lowest-paid position is just ludicrous."


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