7-figure paychecks here to stay at nonprofit hospitals

As they fulfill their charitable mission, nonprofit hospitals and health systems continue to dole out seven-figure compensation packages to their chief executives, the Hamilton Journal News reported.

The growing criticism surrounds fat paychecks, although they fit well within nonprofit industry norms, according to Lancaster Online.

"[W]hen people see million-dollar salaries for someone running a charity, they are outraged," Ken Berger, president and CEO of Charity Navigator, an American charity evaluator, told Lancaster Online.

But nonprofit healthcare organizations defend their executive pay packages as essential to attracting and retaining top talent.

And despite the controversy, executive compensation plays a minimal role in escalating healthcare costs, Sean Flaherty, a professor of economics at Pennsylvania's Franklin & Marshall College, told Lancaster Online.

Similarly, compensation committee member Don Harting at Ohio's Kettering Health Network said, "I would also like you to recognize that executive compensation in the big scheme of things is a pretty small piece of the total cost of operating a hospital," according to the Journal News. "Most of the hospital costs are related to services, related to patient care."

But not all nonprofit hospital execs are seeing million-dollar compensation. Ephrata (Pa.) Community Hospital, for instance, gave its CEO about $530,000 in total pay in 2010, far below its larger counterparts, according to another Lancaster Online article.

Meanwhile, chief executives at nonprofit health insurers are enjoying hefty pay packages. For example, CEOs of 35 Blue Cross Blue Shield plans saw about $93 million in total compensation in 2011, with $40 million stemming from bonuses, FierceHealthPayer reported today.

To learn more:
- read the Journal News article
- check out the Lancaster Online articles on compensation and Ephrata

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