Pay for 21 Washington nonprofit hospital leaders exceeded $1M

Washington nonprofit hospital leaders are raking in the big bucks, according to a survey of Puget Sound hospitals. CEOs at Multicare Health System, Northwest Hospital, Providence Health and Services, and Virginia Mason Medical Center made more than $2 million each, public radio station KUOW reports.

The findings resembled earlier findings for Baltimore-area hospitals, but were less detailed.

KUOW looked at executive pay packages, which are spelled out in 990 forms all nonprofits must file with the Internal Revenue Service. It limited its survey to 16 hospital organizations with at least $250 million in revenues.

The top earner for 2008 was former Swedish CEO Richard Peterson with $8.3 million in compensation, followed by Multicare's Diane Cecchettini, who earned $5.7 million. In 2009, Multicare Health System, which runs three hospitals in Tacoma and one in Puyallup, paid Cecchettini $2 million.

"Her compensation, frankly, is well deserved because of her good work," said Multicare chairman John Folsom. He cited the complexity of her job and the need for high-level business skills to explain her healthy compensation package.

Twenty-one top execs and doctors earned in excess of $1 million in 2008, although in return for tax breaks, the Internal Revenue Service specifies that nonprofits pay executives only "reasonable amounts."

But who decides what's reasonable? Outside consultants offer recommendations, but hospital boards ultimately decide on             executive compensation packages.

When deciding on executive compensation, hospital boards must weigh public perceptions of pay against an organization's ability to recruit and retain good management, Hay Group compensation consultant, C.J. Bolster, told KUOW.

To learn more:
- see the list of top earners at Puget Sound-area hospitals
- read KUOW's transcript