How CEOs Justify Their Pay
Fuller said physicians who are measuring their many years of training against a CEO with an MBA are missing the point. "To the doctor who says, 'I went to medical school,' I would argue that the CEO has a lot more to worry about and a lot more responsibility," he said. "The CEO has responsibility for every single doctor, every single nurse, and every single person walking the halls of that hospital."
As Fuller and many others see it, the CEO defines the very mission of the organization, and if this person were to leave abruptly, the whole enterprise could be harmed. When the compensation committee at the University of California Board of Regents heard that David T. Feinberg, MD, CEO of UCLA Health System, was a candidate for a job somewhere else, it upped his base pay by 20% and awarded him a $250,000 annual retention bonus, according to minutes of the committee.
The need to retain a CEO may be even more pressing if the hospital is in financial straits, according to Terry Brown, the compensation consultant. When a hospital is losing money, "an increase might be necessary, because the CEO could be attracted away to an organization that is less troubled," he said. "People who have the skills to deal with a deteriorating situation are even rarer than those who have the skills to run a hospital in the normal environment."
Dr. Poses isn't so sure. Raising compensation to keep a CEO "could be appropriate, assuming that's how the hospital would treat any important employee." But raising CEO pay when a hospital is struggling sends the wrong message, he believes. "If the hospital is having financial difficulties sufficient to require cuts, why should those who directly care for patients be cut while administrators get raises?"
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Cite this: Do Healthcare CEOs Deserve More Money Than Doctors? - Medscape - Jul 02, 2014.