Paduda: Hospital CEO Pay and Outcomes

Wednesday, February 16, 2022 | 0

An excellent piece by Merrill Goozner highlighted, among other things, the disconnect between nonprofit hospital CEO pay and their hospital’s ability to control costs. 

Joe Paduda

Merrill cited the Lown Institute’s analysis of hospital performance, DEI results, outcomes, cost and pay equity. Since 1996, hospital costs have risen about 2.5 times faster than overall inflation.

Why?

Quoting Merrill:

You’d think the boards of trustees at the nation’s nonprofit hospitals, which account for 80% of all staffed beds in this country, would be up in arms over top management’s inability to keep prices and thereby patient costs under control. At the least, they might want to incentivize their chief executive officers and other C-suite staff to take cost control seriously.

Nope:

... up to 40% of a CEO’s bonus depended on measures that directly affect hospital finances.

Nonprofit hospitals are a BIG part our health care problem. Most don’t care about rising health care costs, and they don’t tightly link CEO compensation to clinical outcomes.

Now I know why I had to pay $355 for ear wax removal.

What does this mean for you?

Hospital leaders’ and their boards’ priorities are not ours. 

Joseph Paduda is co-owner of CompPharma, a consulting firm focused on improving pharmacy programs in workers’ compensation. This column is republished with his permission from his Managed Care Matters blog.