Nonprofit hospitals defend high CEO pay

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Board members at two California hospitals recently defended paying their top executives annual salaries of roughly $800,000 each.

A state database identified the top-earning public official in the state as Nancy Farber, CEO of the Washington Township Health Care District in Fremont, Calif. A bonus of $162,783 pushes her total annual compensation for 2012-13 to $813,914, the Silicon Valley Mercury-News reported.

The salary comparison is unfair, board member Bernard Stewart told the paper.

"It's a temptation for all of us to compare the CEO's salary with other elected officials or other public officials," Stewart said, but "that is an absolute error. … We are engaged in an incredibly competitive and difficult business and we are different from any other public organization in that regard."

On a website addressing CEO compensation, the Washington Township Health Care District notes it receives no tax dollars to fund its operations.

Meanwhile, in San Diego, Palomar Health CEO Michael Covert came under fire by the San Diego Union-Tribune for his $778,000 2011 salary, as reported by the State Controller's Office, putting him in the No. 2 spot behind Farber. More recent salary figures were not available from the state survey, although Palomar said he received a pay increase in 2012, the paper reported.

Hospital officials defended Covert's pay as "commensurate with his duties as the head of the largest public healthcare district in the state, as measured by land area," and compared to his peers in private healthcare, the Union-Tribune noted. The hospital has $2 billion in annual gross revenue, 3 percent of which comes from property taxes.

At Scripps Health, CEO Chris Van Gorder was paid $1.45 million managing $2.4 billion in revenue in 2011, while Tim Smith of Sharp Memorial Hospital made $586,013 managing $935.2 million in revenue the same year, according to the Union-Tribune.

In North Carolina, the top 10 executives at Charlotte-based nonprofit Carolinas HealthCare System each were paid more than $1 million last year, 8 percent more than the previous year, Charlotte Observer reported earlier this month. CEO Michael Tarwater earned $4.76 million in 2012, including base salary, bonuses and benefits.

"It does raise an eyebrow for me when you have (a) hospital CEO taking home that kind of pay and, on the other hand, sending very low-income patients to collections and suing them," Jessica Curtis, director of the Hospital Accountability Project for Community Catalyst in Boston, told the Charlotte Observer.

To learn more:
- read the Mercury-News report
- here's the U-T article
- check out the Charlotte Observer article

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