Eight Baltimore-area nonprofit hospitals gave their top executives hefty seven-figure salaries, club memberships and financial planning as part of pay packages in 2009, reports the Baltimore Sun.
The newspaper surveyed CEO pay packages from 27 Baltimore-area hospitals using the 990 forms they must file with the Internal Revenue Service.
"We've had CEOs get golf club memberships and trips on yachts and things like that," Ryan O'Donnell, executive director of Common Cause Maryland, told the Sun. "You have hospitals in Maryland where part of their mission is to provide nonprofit care, but then they're going after people who can't pay during tough economic times. It doesn't make sense to do that when they're paying CEOs these salaries."
Former University of Maryland Medical System CEO Edmond Notebaert was the highest-paid with $7.8 million in total compensation--up nearly $5 million from 2008. Notebaert's "other compensation" ($5,498,671) accounted for financial planning, tax preparation services, tuition reimbursement and health reimbursement, among others.
Kenneth Samet, President, CEO and Director of Medstar Health, earned the second-highest salary with $2,647,227 in total compensation. Nearly half of his salary ($1,157,977) came in the form of a bonus.
Although the IRS has increased the transparency of hospital reporting, issues still remain. For example, hospitals don't have to report deferred compensation execs would receive if they reached certain anniversary milestones with the company, said Marcus Owens, who was a lawyer with the IRS for 25 years, according to the Sun. Hospitals only have to disclose those earnings when they're actually paid out.
Furthermore, state officials don't have the authority to determine how much hospital CEOs can make. "They don't have any limitations," said Robert Murray, executive director of the Maryland Health Services Cost Review Commission, the agency that sets hospital rates. "If they are able to lower underlying costs and generate profit, they can decide to allocate some of the profit to higher salaries if they want," he noted.