Nonprofit hospital CEOs earn more--but don't always deliver better outcomes

High-paid CEOs have more inpatient care complications, higher expenses
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Nonprofit hospitals with highly-paid CEOs score better on performance measures overall, but have higher rates of inpatient care complications and inpatient expenses, according to a new report from Mercer and Truven Health Analytics.

Data from nonprofit providers indicated that among those ranking in the top 10 percent for clinical, operational and financial performance measures between 2010 and 2015, CEO compensation was higher as well. However, they found an association between higher CEO pay and other aspects of hospitals, as well, with median compensation higher at bigger, more prominent providers. They also found that after adjusting for hospital class, CEOs of independent providers made about 19 percent more than those of health systems.

However, the researchers also found an association between higher CEO compensation and lower performance on adjusted inpatient expenses and inpatient care complications. This seeming contradiction, the authors write, may indicate hospitals are improving their documentation or alternately, inconsistently reporting "present on admission" conditions.

Moreover, the authors wrote, hospitals with higher-paid CEOs performed better on the Center for Medicare & Medicaid Services' Value-Based Purchasing, suggesting the program has prompted hospital boards to incorporate individual clinical measures into CEO pay.

"Further study of the contradictory association between higher compensation and higher expense is required to identify the cause," the report states. "Heavy investment in computerized patient record systems, physical plant renovation, purchase of physician practices and investments to address the requirements of the Affordable Care Act between the years 2011 and 2013 have had an impact on hospital expense and may be driving these results."

Healthcare executive pay ranked third in growth last year across eight industries, FierceHealthcare previously reported, as well as overall compensation. Over the last year, their compensation bucked an overall trend of sluggish growth in chief executive officer and chief financial officer pay across other publicly-traded companies.

To learn more:
- read the report (.pdf)

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