Study: Nonprofit hospital CEOs earn $600,000 a year

Patient record form with stethoscope

A new study shows that chief executive officers at non-profit hospitals make about $600,000 a year.

The salary findings, published in JAMA Internal Medicine on Oct. 14, were based on data from almost 2,700 hospitals.

The study authors wrote that prior to their research, not much information has been available on how much hospital CEOs are compensated.

They used 2009 tax forms filed by nonprofit hospitals to determine salaries. A total of 1,877 CEOs from 2,681 hospitals were included.

The CEOs were paid an average of $595,781 that year. Those that were working with small, non-teaching hospitals in rural areas made the least at a median of $117,933 a year. Those who were in larger, urban hospitals often linked to a teaching institution made a median salary of more than $1.6 million a year.

However, higher CEO compensation did not guarantee better medical care at these facilities.

More charity care (such as treating people without insurance), better financial performance or better process quality were not linked to increases in a CEO's compensation. Neither were mortality or readmission rates for common conditions researchers looked at including pneumonia, heart attacks and heart failure.

One factor that did play a role in higher compensation was higher patient satisfaction scores. Hospitals with more satisfied patients had higher paid CEOs. Hospitals with the most advanced technology were also correlated with CEOs who made the most money.

"Among the quality metrics we examined, only patient satisfaction was consistently associated with CEO compensation," the authors wrote.

Dr. Ashish Jha, a professor of health policy and management at the Harvard School of Public Health in Cambridge, Mass., told Reuters he was surprised at what factors were connected to higher pay.

He added that the connection didn't mean these factors guaranteed more compensation. The results may suggest that hospitals may value CEOs who like being on the cutting-edge of technology or that hospitals with money can afford to pay their CEOs more and buy more new devices.

Still, he was surprised that there was no link between improving quality of care and better compensation. Jha pointed out that if there is a push for medical staff to do a better job than everyone -- including high levels of management -- should be behind the decision and rewarded for successes.

"I was hoping I'd see even some modest relationship with quality performance," said Dr. Ashish Jha. "I think we were a little disappointed."

Co-author Dr. Karen Joynt, an instructor in the department of health policy and management at Harvard School of Public Health, added to MedPage Today that she hoped this study would trigger hospital boards to reevaluate what factors should influence compensation.

"Maybe just having a little bit more information about the lack of correlation between quality metrics and CEO compensation might start a conversation about how we could use compensation as a tool to help incent the kind of behavior and the kind of priorities we think are most important in nonprofit hospitals," she explained.

The American Hospital Association pointed out some inconsistencies with the study.

Compensation for nonprofit hospital leaders "is set by an impartial board of community representatives," association spokeswoman Elizabeth Lietz told the Associated Press. "It appears that the study fails to fully capture the full range of responsibilities of today's health care leaders."