The curious case of the healthcare CEO who took a pay cut

The increase in healthcare CEO compensation is a touchy issue, but not every top executive decides to pad an already sky-high salary with a generous raise, according to Becker's Hospital Review.

One notable case is that of Paul Levy, the erstwhile president and CEO of Beth Israel Deaconess Medical Center in Boston. He and his executive team volunteered to take pay cuts and eschew bonuses as a gesture of solidarity in 2009, when the Great Recession had put the squeeze on most of the country, according to Becker's.

"To me, [taking a pay cut] was just the moral thing to do," Levy told the publication. "If you are going to freeze people's salaries or reduce staff, I don't see how you'd feel right with yourself not doing taking a cut, but I know a lot of people don't feel the same way."

While such a move is often largely symbolic, Levy and his colleagues went even further by asking hospital staff to help slash costs in order to shield the facility's lowest-paid workers from cuts and layoffs. Many clinicians chose to give up raises or forgo vacation time, according to Becker's, and those concessions plus the executive team's sacrifices helped the hospital save 400-600 jobs and as much as $16 million.

The Beth Israel story, however, is likely the exception and not the rule. Not only are healthcare executives' base salaries higher than that of even the most highly trained physicians, but CEO base pay also continues to grow faster than other C-suite positions, FierceHealthcare and FierceHealthFinance have reported. And the chief executives of nonprofit hospitals do particularly well, as one recent report found that the CEOs at the 10 highest-grossing nonprofit facilities earn an average of $3 million.

In the rare case that executives do take a pay cut, they most often do so voluntarily, as Levy did, because contractual issues makes it difficult for hospital boards to impose such measures on the C-suite, Becker's notes. However, occasionally executives will take a pay cut rather than move to another organization if a change in their job responsibilities requires them to take on a smaller role.

To learn more:
- read the article

Related Stories:
CEO pay growth outstrips other positions
Hospital CEOs--not doctors--among medicine's top earners
Top healthcare CEO compensation trends in 2014
Docs respond to soaring CEO pay
CEO compensation rates from 10 highest-grossing healthcare non-profits
High CEO pay based on performance, not greed, say defenders
Hospital pulls from exec bonuses to give employee raises