U of Pittsburgh execs face 25 percent pay cut

Just as at other hospitals, times are tough at the University of Pittsburgh Medical Center. The academic medical institution has been hit by investment losses that severely undercut its bottom line, losing $7 million for the first nine months of fiscal 2008.

This comes despite the institution's aggressive revenue-generation strategy, which includes not only regional care services but also building cancer centers  in Europe and the Middle East and sinking big bucks into health IT development partnerships.

For all of fiscal 2008, UPMC reported that it had operating income of $184 million on $7 billion in revenue, a 2.6 percent operating margin. While this actually puts it in better position than many U.S. medical centers, it's not enough for execs there.

In an effort to lower expenses and beef up that margin, the institution is cutting executive compensation 25 percent. This comes as part of its plan to shave $150 million--or about 2 percent--off of its operating expenses. Other than announcing the pay cuts, UPMC execs haven't released details of their plans.

The move may be driven by public considerations as much as cost-cutting, as lowering even the highest salaries won't have a huge impact on an institution this size.  In recent times, UPMC has faced public criticism over executive compensation, particularly the $3.95 million in salary paid to its CEO in 2007. (UPMC paid a total of 11 people over $1 million that year.)

To learn more about the cost-cutting program:
- read this Modern Healthcare piece (reg. req.)

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