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Hospital chief executive officers (CEOs) face major challenges managing finances and health care reform. In addition, CEOs must deal with issues such as patient satisfaction, technology changes, physician relations, personnel shortages and the day-to-day issues of running a complex operation. CEO compensation, which averages close to $600,000 per year, according to an October 2013 article in “JAMA Internal Medicine,” reflects this high level of responsibility.
Factors in CEO Salaries
Many factors are involved in determining hospital CEO compensation, according to the “JAMA Internal Medicine” article. For example, larger facilities pay more than do hospitals with teaching status, which pay an average base salary of $425,078 annually. Hospitals with highly advanced technology also paid more -- with additional average compensation of $135,862 per year above the base salary. High patient satisfaction -- the primary quality indicator for CEOs -- could add approximately $51,000 to a CEO paycheck.
"Becker's Hospital Review" reported data on 25 nonprofit hospital CEOs in 2010. CEOs in nonprofit hospitals earned annual salaries ranging from $508,753 for an interim CEO at Temple University Hospital in Philadelphia to $9.72 million at Northwestern Memorial Hospital in Chicago. Other top-paid CEOs included Herbert Pardes, of New-York Presbyterian Hospital, who earned $4.35 million, and University of Pittsburgh Medical Center CEO Jeffery Romoff, who earned $5.97 million in 2010. Steven Safyer, the CEO at Montefiore Medical Center in the Bronx and who is also an M.D., earned $4.07 million.
In the largest for-profit health-care systems in the United States, CEO salaries ranged from $741,667 to $1.4 million in 2011, according to an April 2012 article in "Becker’s Hospital Review." These systems included Community Health Systems, Health Management Associates, Hospital Corporation of America, IASIS Healthcare, LifePoint Hospitals, Tenet Healthcare, Universal Health Services and Vanguard Health Systems. All are multistate organizations, some with hospitals nationwide. Five of the eight CEOs earned more than $1 million in 2011.
Salary is not the only compensation CEOs receive, according to "Becker’s Hospital Review." Stock options, bonuses and incentives can increase total compensation into the $20 million range for some CEOs. LifePoint CEO Bill Carpenter, for example, earned a salary of $968,500 in 2011, but his total compensation was $7.73 million. Health Management Associates’ Gary Newsome took home a $941,667 salary and $6.16 million in additional compensation. CEO Wayne Smith of Community Health Systems earned a $1.4 million salary but received an additional $20.18 million in incentives, bonuses and stock awards.
- American College of Healthcare Executives: Top Issues Confronting Hospitals: 2012
- JAMA Internal Medicine: Compensation of Chief Executive Officers at Nonprofit US Hospitals
- Bloomberg.com: U.S. Nonprofit Hospital CEO Annual Pay Averages $600,000
- Becker's Hospital Review: CEO Compensation of the 25 Top-Grossing Non-Profit Hospitals
- Becker’s Hospital Review: 48 Statistics on for-Profit Hospital Operator Executive Compensation
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