June 28, 2010; Source: California Watch | In recent months, increasing news coverage has pointed out the outsized, and often times hard to justify, salaries paid to heads of nonprofit hospitals. But try as they might, it’s hard to imagine how any hospital can spin a convincing story to explain how its CEO gets paid more than what the organization dispenses in services. Yet, according to California Watch, CEO pay at 11 nonprofit hospitals in the state for 2007-2008 exceeded the amount of charity care their institutions rendered.
These 11 hospital heads were among 16 whose salaries for the same period were one million dollars or more. The California Watch article cites findings from a study conducted by the trade publication Payers & Providers. It found that J. Kendall Anderson, CEO of John Muir Health, was the highest-paid executive in the state, earning $7.45 million in 2008, of which $5.3 million was part of a one-time retirement payout. Executives from Cedars Sinai, Hoag Memorial, Scripps Health and Stanford also enjoyed fat salaries, each earning more than $1.5 million in 2007.
California Watch says the report on CEO pay “adds to a growing body of research that exposes nonprofit hospital chief executives to questions of whether their compensation aligns with the mission of tax-exempt hospitals. Those hospitals, nationwide, receive $12 to $20 billion in tax breaks in exchange, theoretically, for providing charity care to the needy.”—Bruce Trachtenberg