Hospital CEO pay rewards technology, not outcomes

Hospital CEO pay is based more on technology and patient satisfaction than on outcomes, processes of care and community benefit, a study published online Monday in JAMA Internal Medicine found.

Surprisingly, the study found no correlation between CEO pay at private, nonprofit U.S. hospitals and hospital margins, liquidity, capitalization, mortality, readmissions, process quality performance or occupancy rates.

Compensation rates did reflect the number of hospital beds, whether the hospital was a teaching facility, and location--with large, urban teaching hospitals conferring the highest compensation.

Hospitals with more advanced technology also provided more generous CEO compensation, according to the findings, as did those with high patient satisfaction scores. Technology was worth more than patient satisfaction, adding $135,862 to the CEO's pay compared with the $51,706 patient-satisfaction bump.

Mean compensation for the 1,877 CEOs responsible for 2,681 hospitals was $595,781 in 2009. The median pay was $404,938.

Pay for hospital chief executives in Oregon rose 4.2 percent in 2011, for example, more than twice the rate of the typical U.S. worker. The highest-paid Oregon hospital CEO received $4.2 million in total compensation that year. And in Chicago, 20 hospital CEOs earned more than $1 million in 2011, according to Crain's Chicago Business.

Total compensation typically includes a number of perks beyond a hospital CEO's base pay. A September survey of healthcare executive benefits from Integrated Healthcare Strategies found approximately 86 percent of healthcare CEOs had a car or car allowance in 2012, FierceHealthcare previously reported.

For more information:
- here's the study abstract
- read JAMA's announcement