Despite lower profits, executives at Erlanger Health System earned bigger bonuses in December compared with awards shelled out the previous year, reports the Chattanooga Times Free Press.
In December 2010, 123 management-level execs at the the Tennessee-based hospital split $1.9 million in bonus payouts, with President and CEO Jim Brexler receiving $192,395 on top of his base salary of $550,000.
The payouts were based on Erlanger's operating profit of $8.58 million for fiscal year 2010, which ended in June. However, the hospital brought in a higher profit of $10.8 million in FY 2009, yet bonus payments only totaled $1.7 million--$200,000 less than the total awarded in December.
In addition, one month before announcing the bonus payouts, Erlanger granted 2 percent across-the-board raises for its 4,200 employees--minus 17 executive-level managers--totaling $4 million.
Hospital trustees defend the payments, saying Erlanger's performance in FY 2010 deserves recognition, notes the Times Free Press.
But executives might find it harder to earn such recognition this year as the hospital has set more demanding bonus requirements. The standards will place more value on Erlanger's performance in quality measures such as surgical infections rates, as well as require a minimum operating profit of $12 million before even considering bonuses.
So far, Erlanger has earned a $1.3 million profit for FY 2011, compared with a budgeted $6 million profit, according to financial statements released Monday.
"The board made the decision to raise the bar," Gregg Gentry, senior vice president for human resources at Erlanger, told the Times Free Press. "The criteria continue to be more challenging."
These payouts follow news that UCLA Hospital System CEO David Feinberg received a $218,728 bonus this month, bringing his annual salary to about $1 million, according to LA Weekly. The announcement came one day after University of California President Mark Yudof said layoffs and course reductions will be necessary to close a $1 billion budget gap next year.