Making Boards More Accountable
The ultimate measure of what CEOs earn, Fuller maintains, is up to each hospital. "It's just like any other market," he said, using real estate as an example. "I may think my house is worth a million bucks, but in fact, my house is only worth what someone is willing to pay for it."
Dr. Poses, however, argues that the market for CEOs isn't as free and open as it would seem. The decision on whether the chief executive will get a pay raise, he said, rests in the hands of a small group of like-minded people on the hospital board -- specifically, the compensation committee.
In his blog, Dr. Poses gives an example of how overly generous some boards are. A small Pennsylvania hospital system paid its CEO more than $1 million during the year that he took a leave of absence to serve in the military, and then also paid more than $1 million that year to his replacement. Dr. Poses said that although the hospital was legally obligated to keep the job open for the CEO on leave, it wasn't obligated to pay two people for one job.
To bring more impartiality to the CEO-board relationship, boards "should not appear to be cronies of the top administrators, and should not be dominated by CEOs, executives, and administrators of other organizations," Dr. Poses said.
Fuller, in fact, agrees that there's too little diversity on many hospital boards. "The composition of boards tends to be a bunch of fellow CEOs from the community who play golf together," the hospital CEO-search executive said. "There should also be a doctor or two on the board, as well as someone who understands medical technology."
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Cite this: Do Healthcare CEOs Deserve More Money Than Doctors? - Medscape - Jul 02, 2014.