National survey finds hospital CEO pay based on several factors; salaries for Blessing, Hannibal Regional executives below national average

Posted: Oct. 24, 2013 8:58 am Updated: Nov. 14, 2013 9:16 am

AP Medical Writer

CEOs at nonprofit hospitals earned an average of $600,000 a year — and in some cases, more than $3 million — but there was no correlation between high pay and good outcomes for patients, according to a new study.

CEOs were paid more at hospitals that got high patient satisfaction scores; used more high-tech equipment including advanced imaging machines; had more beds and were located in large urban areas. But pay wasn't reflected in 30-day outcomes for patients with heart attacks, heart failure, or pneumonia in 2008, including deaths and readmissions.

Those are among publicly reported outcome measures used by the federal Centers for Medicare & Medicaid Services and others.

While these hospitals get big tax exemptions for providing charity care and other community benefits, the researchers said the top executives' annual pay wasn't tied to those measures, either.

CEO compensation varied widely, from less than $100,000 to more than $3 million but averaged almost $600,000 in 2009, the study found.

Maureen Kahn, the president and CEO of Blessing Hospital in Quincy since May 2005, made $479,420 according to her 2012 federally reported income. She also serves as vice president of quality integration for Blessing Health System.

The Compensation Committee of the Blessing Corporate Services Board of Trustees determines her salary. Blessing officials said an independent company — Sullivan, Cotter and Associates, considered an expert in executive compensation — conducts a survey every other year to review the base pay of the top executives at Blessing with comparable healthcare organizations across the nation.

The goal, Blessing officials said, is to ensure base pay is "fair market value." The Compensation Committee uses data to determine if a change is needed to executive base pay. Blessing leaders are eligible for bonuses for meeting Board of Trustee-approved annual goals that include patient satisfaction, quality outcomes, stockholder satisfaction, staff safety, financial performance and accomplishment of key strategic goals.

Lynn Olson, the CEO at Hannibal Regional Hospital, has a base salary of $294,756. HRH officials said Olson is accountable for his performance in that his compensation is based upon achieving specified quality goals, patient satisfaction and ensuring the hospital's cost-to-discharge ratio remains low.

HRH officials said Olson's 30 years of "experience, knowledge and commitment to our values" have brought about "positive change in our community since his arrival in 2011."

The results of the were "a little disappointing," said study author Dr. Ashish Jha, a health policy professor at Harvard's School of Public Health. To not hold CEOs accountable for whether patients live or die within 30 days of treatment "doesn't quite make sense," he said.

Jha said the study results are a message for hospital boards that decide CEO compensation: ‘"If you really care about patient outcomes here's a place to look."

The study was published this week  in JAMA Internal Medicine.

The study is based on an analysis of public records including federal tax returns for 1,877 CEOs overseeing 2,681 private nonprofit hospitals. Most U.S. hospitals are nonprofit and those studied comprise 98 percent of private nonprofit hospitals, the study authors said.

In an editorial in the same journal, a hospital CEO in San Francisco disputes the conclusion and said CEOs may be compensated based on many other quality measures the authors didn't consider. Dr. Warren Browner, CEO at California Pacific Medical Center, said using death rates and readmissions as a comparison can be misleading because both may be higher at hospitals that treat a higher proportion of very sick patients.

The American Hospital Association also took issue with the study.

Compensation for nonprofit hospital leaders "is set by an impartial board of community representatives," said association spokeswoman Elizabeth Lietz.

Browner, the editorial author, said hospital CEOs' compensation typically includes a base salary plus incentive pay if the hospital meets certain targets, which may include financial performance, patient satisfaction and several other quality measures.

Herald-Whig Staff Writer Steve Eighinger contributed to this story.