Hospital CEOs defend their million-dollar compensation

With the public eye on executive paychecks amid rising healthcare costs, hospital CEOs are defending their compensation packages in the millions.

For instance, after a newspaper reported that Wisconsin's Mercy Health System President and CEO raked in $3.6 million in total compensation, executive Javon Bea responded. He said his compensation resulted from a combination of his base salary, incentive pay for years of achievement, and several years of deferred income that he invested successfully, reports Gazette Xtra.

Bea also said his organization doesn't have a chief operating officer so he does the work of that job role too.

"There's a difference between creating a billion-dollar entity and running a billion-dollar entity," he said. "I've taken Mercy's gross revenues from $33 million to over $1 billion."

He also stated that his compensation doesn't affect patients' wallets.

"My salary isn't going to affect your health care cost," Bea said.

The national average for compensation is $630,000, including base salaries, bonuses, pensions, and other benefits, according to the article. However, as evidenced by recent IRS tax forms, some hospital executives far exceed that number.

James Anderson, former CEO of Cincinnati Children's Hospital Medical Center, received one of the biggest paychecks compared to other area hospitals. Anderson received approximately $1.9 million in 2009, mostly attributed to retirement plan changes to defer incentive bonuses, according to the Middletown Journal.

The hospital also attributes the amount to compensating for good leadership.

"To achieve its vision to be the leader in improving child health, we compete nationally and globally for top medical, research and executive talent," Cincinnati Children's spokesman Terry Loftus said. "We offer competitive salaries that enable us to attract and retain the most talented staff and appropriately recognize their significant responsibilities and achievements."

The cost of talent certainly has a price.

"No one, including the boards of these organizations, denies this is a lot of money. But what they'll tell you is this takes a special leader," said Ron Seifert, executive compensation practice leader for the healthcare practice at Hay Group. "They come with a price tag."

For more information:
- read the Gazette Xtra article
- here's the Middletown Journal article

Related Articles:
The problem of 8-figure hospital paychecks and near-poor patients
Hospital CEOs earn $1M bonuses, face state scrutiny
Top-earning CEO receives $10M at Northwestern Memorial
Hospital CEO receives $1M after failed merger
Hospital exec pay keeps rising