The Growing Executive-Physician Wage Gap in Major US Nonprofit Hospitals and Burden of Nonclinical Workers on the US Healthcare System.

BACKGROUND: In an era of increasing healthcare costs, the number and value of nonclinical workers, especially hospital management, has come under increased study. Compensation of hospital executives, especially at major nonprofit medical centers, and the "wage gap" with physicians and clinical staff has been highlighted in the national news. To our knowledge, a systematic analysis of this wage gap and its importance has not been investigated. QUESTIONS/PURPOSES: (1) How do wage trends compare between physicians and executives at major nonprofit medical centers? (2) What are the national trends in the wages and the number of nonclinical workers in the healthcare industry? (3) What do nonclinical workers contribute to the growth in national cost of healthcare wages? (4) How much do wages contribute to the growth of national healthcare costs? (5) What are the trends in healthcare utilization? METHODS: We identified chief executive officer (CEO) compensation and chief financial officer (CFO) compensation at 22 major US nonprofit medical centers, which were selected from the US News & World Report 2016-2017 Hospital Honor Roll list and four health systems with notable orthopaedic departments, using publicly available Internal Revenue Service 990 forms for the years 2005, 2010, and 2015. Trends in executive compensation over time were assessed using Pearson product-moment correlation tests. As institution-specific compensation data is not available, national mean compensation of orthopaedic surgeons, pediatricians, and registered nurses was used as a surrogate. We chose orthopaedic surgeons and pediatricians for analysis because they represent the two ends of the physician-compensation spectrum. US healthcare industry worker numbers and wages from 2005 to 2015 were obtained from the Bureau of Labor Statistics and used to calculate the national cost of healthcare wages. Healthcare utilization trends were assessed using data from the Agency for Healthcare Quality and Research, the National Ambulatory Medical Care Survey, and the National Hospital Ambulatory Medical Care Survey. All data were adjusted for inflation based on 2015 Consumer Price Index. RESULTS: From 2005 to 2015, the mean major nonprofit medical center CEO compensation increased from USD 1.6 ± 0.9 million to USD 3.1 ± 1.7 million, or a 93% increase (R = 0.112; p = 0.009). The wage gap increased from 3:1 to 5:1 with orthopaedic surgeons, from 7:1 to 12:1 with pediatricians, and from 23:1 to 44:1 with registered nurses. We saw a similar wage-gap trend in CFO compensation. From 2005 to 2015, mean healthcare worker wages increased 8%. Management worker wages increased 14%, nonclinical worker wages increased 7%, and physician salaries increased 10%. The number of healthcare workers rose 20%, from 13 million to 15 million. Management workers accounted for 3% of this growth, nonclinical workers accounted for 27%, and physicians accounted for 5% of the growth. From 2005 to 2015, the national cost-burden of healthcare worker wages grew from USD 663 billion to USD 865 billion (a 30% increase). Nonclinical workers accounted for 27% of this growth, management workers accounted for 7%, and physicians accounted for 18%. In 2015, there were 10 nonclinical workers for every one physician. The cost of healthcare worker wages accounted for 27% of the growth in national healthcare expenditures. From 2005 to 2015, the number of inpatient stays decreased from 38 million to 36 million (a 5% decrease), the number of physician office visits increased from 964 million to 991 million (a 3% increase), and the number of emergency department visits increased from 115 million to 137 million (a 19% increase). CONCLUSIONS: There is a fast-rising wage gap between the top executives of major nonprofit centers and physicians that reflects the substantial, and growing, cost of nonclinical worker wages to the US healthcare system. However, there does not appear to be a proportionate increase in healthcare utilization. These findings suggest a growing, substantial burden of nonclinical tasks in healthcare. Methods to reduce nonclinical work in healthcare may result in important cost-savings. LEVEL OF EVIDENCE LEVEL: IV, economic and decision analysis.

Does CEO compensation impact patient satisfaction?

PURPOSE: This study examines the relationship between CEO compensation and patient satisfaction in Ontario, Canada. The purpose of this paper is to determine what impact hospital CEO compensation has on hospital patient satisfaction. DESIGN/METHODOLOGY/APPROACH: The analyses in this study were based on data of 261 CEO-hospital-year observations in a sample of 103 nonprofit hospitals. A number of linear regressions were conducted, with patient satisfaction as the dependent variable and CEO compensation as the independent variable of interest. Controlling variables included hospital size, type of hospital, and frequency of adverse clinical outcomes. FINDINGS: CEO compensation does not significantly influence hospital patient satisfaction. Both patient satisfaction and CEO compensation appear to be driven primarily by hospital size. Patient satisfaction decreases, while CEO compensation increases, with the number of acute care beds in a hospital. In addition, CEO compensation does not even appear to moderate the influence of hospital size on patient satisfaction. RESEARCH LIMITATIONS/IMPLICATIONS: There are several limitations to this study. First, observations of CEO-hospital-years in which annual nominal CEO compensation was below $100,000 were excluded, as they were not publicly available. Second, this research was limited to a three-year range. Third, this study related the compensation of individual CEOs to a measure of performance based on a multitude of patient satisfaction surveys. Finally, this research is restricted to not-for-profit hospitals in Ontario, Canada. PRACTICAL IMPLICATIONS: The findings seem to suggest that hospital directors seeking to improve patient satisfaction may find their efforts frustrated if they focus exclusively on the hospital CEO. The findings highlight the need for further research on how CEOs may, through leading and supporting those hospital clinicians and staff that interact more closely with patients, indirectly enhance patient satisfaction. ORIGINALITY/VALUE: To the best of the authors' knowledge, no research has examined the relationship between hospital CEO compensation and patient satisfaction. This research fills the gap and provides a basis for future research.

Compensation of chief executive officers at nonprofit US hospitals.

IMPORTANCE: Hospital chief executive officers (CEOs) can shape the priorities and performance of their organizations. The degree to which their compensation is based on their hospitals' quality performance is not well known. OBJECTIVE: To characterize CEO compensation and examine its relation with quality metrics. DESIGN, SETTING, AND PARTICIPANTS: Retrospective observational study. Participants included 1877 CEOs at 2681 private, nonprofit US hospitals. MAIN OUTCOMES AND MEASURES: We used linear regression to identify hospital structural characteristics associated with CEO pay. We then determined the degree to which a hospital's performance on financial metrics, technologic metrics, quality metrics, and community benefit in 2008 was associated with CEO pay in 2009. RESULTS: The CEOs in our sample had a mean compensation of $595,781 (median, $404,938) in 2009. In multivariate analyses, CEO pay was associated with the number of hospital beds overseen ($550 for each additional bed; 95% CI, 429-671; P < .001), teaching status ($425,078 more at major teaching vs nonteaching hospitals; 95% CI, 315,238-534,918; P < .001), and urban location. Hospitals with high levels of advanced technologic capabilities compensated their CEOs $135,862 more (95% CI, 80,744-190,990; P < .001) than did hospitals with low levels of technology. Hospitals with high performance on patient satisfaction compensated their CEOs $51,706 more than did those with low performance on patient satisfaction (95% CI, 15,166-88,247; P = .006). We found no association between CEO pay and hospitals' margins, liquidity, capitalization, occupancy rates, process quality performance, mortality rates, readmission rates, or measures of community benefit. CONCLUSIONS AND RELEVANCE: Compensation of CEOs at nonprofit hospitals was highly variable across the country. Compensation was associated with technology and patient satisfaction but not with processes of care, patient outcomes, or community benefit.

Package deals. Despite increased scrutiny, executive pay at not-for-profit hospitals still on the rise.

Scrutiny of the compensation of executives at not-for-profit healthcare organizations may be growing, but the highest-paid such executives saw their median total pay grow 12% annually, a review of 2011 and 2010 data shows. Leading the pack for actively employed executives was George Halvorson, left, of Kaiser Permanente. "Compensation paid to senior management is substantially less than that of many for-profit health" insurers, a Kaiser spokesman said.