Answering the call on executive pay for rural hospitals

The City of Bell near Los Angeles doesn't have a hospital--just a cadre of disgraced former employees who raided the treasury for years. Yet their greed has circuitously opened up a window on the challenges of recruiting rural hospital executives.

The Bell fiasco prompted California Controller John Chiang to call on every city, county and special agency in the Golden State to submit their employees' salaries for posting on its website. Roughly four-dozen hospital districts were included.

Healthcare executive pay to me is much like truffles to a hog (you may keep any other comparisons to yourselves). I try to unearth whatever data I can, whether it comes from tax returns or the forgotten minutes of a university's board of regents meeting. That makes me probably the most well-versed journalist in California on hospital executive compensation. When I compiled and crunched the data on the 39 hospital district CEOs last week, it was eye-catching.

District hospital CEOs cannot plead poverty, but there is an enormous chasm between their compensation and their counterparts who head private, not-for-profit facilities. The average district hospital CEO earns total compensation of just under $246,000, and some earn below $150,000.

By contrast, the average not-for-profit hospital CEO in California earns just over $732,000, and more than a dozen earn over $1 million.

District hospitals in California average 114 beds--nearly one-half the statewide average size of 208 beds. Many are far less than 50 beds. However, the difference in size does not correlate to the discrepancy in pay.

I do not pity someone whose job pays well into the six figures, but I will acknowledge that it is stupendously challenging to run a hospital. Jack Burrows, the director of executive services for the Association of California Healthcare Districts, says that being a hospital CEO is one of the most difficult jobs, period. I think that's overstating the case, but I will concede that district hospital CEOs probably have it toughest among all their colleagues.

Here's why: Although comparatively small, that six-figure salary still puts a target on the recipient's back. Most of California's districts hospitals are in isolated agricultural towns where unemployment rates are often north of 20 percent even in good economic times. The board of directors are all elected rather than appointed. As a result, many are healthcare novices and aren't above populist political grandstanding (i.e., run on a platform that public employees are paid too much) in order to angle for a bigger office. The environment outside of work is little better: The schools are often mediocre and little is available in terms of entertainment and culture. Having lived in and written about these towns early in my journalism career, I can make such observations without equivocation.

Burrows of the ACHD makes a blunt observation: It's tough to recruit well-educated professionals like physicians and executives to such hospitals. Yet, as difficult as it is to live in these towns, they still deserve decent community healthcare, which is why the residents voted to create these district hospitals in the decades after World War II and pay levies toward their upkeep.

So, Burrows makes the pitch that is the exact opposite of what many people in this country are feeling right now: When it comes to the CEO, money is no object.

"If the best person out there for the job is $50,000 more than the next best person, hire the best person," Burrows said.

In the context of the trouble bedeviling rural hospitals, I can't disagree. - Ron