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Nonprofit Hospital CEOs Earn $600K on Average: Report

Patient satisfaction, more than quality of care, appears to determine income, study suggests.

Nonprofit Hospital CEOs Earn $600K on Average: Report

MONDAY, Oct. 14 (HealthDay News) -- Chief executives of nonprofit hospitals in the United States make an average of nearly $600,000 a year, according to a new study.

The researchers noted that little is known about how these CEOs are paid and what factors determine their compensation. They examined seven data sources, including publicly available tax forms for nonprofit hospitals in 2009. Their study included nearly 1,900 CEOs responsible for close to 2,700 hospitals.

The CEOs made an average of about $596,000 in 2009. Those who made the least (median of about $118,000) were mainly responsible for small, nonteaching hospitals in rural areas. Those who made the most (median of more than $1.6 million) oversaw larger, more prestigious hospitals in cities that were often teaching institutions.

CEO pay tended to be higher at hospitals with high levels of patient satisfaction and those with more advanced technology. CEO pay, however, was not associated with a hospital's provision of charity care, financial performance, quality of care, death rate or readmission rate.

Only patient satisfaction was consistently associated with what CEOs earned, according to the study, which was published online Oct. 14 in the journal JAMA Internal Medicine.

"On the surface, their most disturbing finding was that CEO pay correlated with patient satisfaction, but not with quality," Dr. Warren Browner, of the California Pacific Medical Center in San Francisco, wrote in an accompanying journal editorial.

The study authors view this as a missed opportunity and recommend that hospital boards provide incentives for CEOs to meet quality goals. "That advice seems strange, since every hospital CEO I know who receives incentive compensation already has quality-related goals," Browner said in a journal news release. "By contrast, patient satisfaction correlated with CEO pay, likely because the subjective experience called patient satisfaction is easy to measure, even though what it actually means is unclear."

More information

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SOURCE: JAMA Internal Medicine, news release, Oct. 14, 2013

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