State probes exec pay at nonprofit hospitals

Nonprofit hospital pay is coming under close scrutiny with a state probe into the paychecks of the highest-paid executives and board members at nonprofit institutions in New York, including hospitals.

After recent media attention and public outcry at six-figure salaries, Gov. Andrew Cuomo (D-N.Y.) set up a task force to scrutinize the top compensation packages of the state's nonprofit heads. The task force on Thursday began investigating whether the executive and board pay is appropriate and if not, whether it warrants returns in funds back to the state, reports the Associated Press. With letters being issued on a rolling basis to nonprofits, the task force is requesting compensation data and justification for those salaries.

Superintendent of the Department of Financial Services and task force chair Benjamin Lawsky said that most healthcare institutions have appropriate compensations, but the task force will look into the "patches of outliers," who issue excessive salaries, according to the AP article.

"There are nonprofits who pay very high compensation and the question is, as they receive state funds, what justifies them having nonprofit status, what good works are they doing, and how much money are they receiving from the state and through tax benefits that are going to their good works and how much is going to their top executives?" Lawsky said in the article.

Nearly 1,926 people at New York nonprofits were paid more than $100,000, reports Reuters. The average salary was $168,555. Together, that adds up to $324.6 million.

Other states including nonprofit hospitals in Oregon and Maryland have faced similar public accusations with paychecks over $1 million.

The task force examination follows other crackdowns into the business of running supposedly not-for-profit hospitals. In Illinois, the Department of Revenue denied three hospitals from a proposed tax-exempt status, arguing they do not adequately fulfill charity care requirements.

The task force investigation could reverberate around the nation, Reuters reports.

For more:
- read the task force letter
- here's the Associated Press article
- read the Reuters article

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