As Hospitals Move Toward Fee-for-Performance, CEOs Still See Pay for Volume

A joint report by Kaiser Health News and ABC News published Sunday puts volume-based compensation bonuses for hospital executives under the microscope during the industry's shift to value-based incentives.


Reporters gathered compensation data for public and nonprofit hospital executives from 2011 and 2012. Critics argue the pay structure for executives often contradicts hospitals' claims they are working to reduce the cost of care by eliminating waste and unnecessary procedures. Hospital advocates counter that the financial health of a hospital is essential, and CEOs should be rewarded for promoting financial strength.


Donald Berwick, MD, former CMS administrator, told KHN and ABC reporters, "Boards of trustees in healthcare are oriented around top-line, revenue goals…They celebrate the CEO when the hospital is full instead of rewarding business models that improve patients' care."


CEO bonuses disclosed in the report, along with responses from the hospitals, include the following statistics, which are listed alphabetically.


•    Lloyd Dean, CEO of Dignity Health based in San Francisco, received a $2.1 million bonus in 2011 for meeting financial performance incentive goals.


•    David Feinberg, MD, CEO of UCLA Hospital System based in Los Angeles earned $262,534 in bonuses in 2012, some of which were awarded for meeting growth goals.


•    Steven Gabbe, CEO of Ohio State University's Wexner Medical Center in Columbus, earned $84,394 in bonuses in fiscal 2012 related to profit and growth increases.


•    R. Edward Howell, CEO of the University of Virginia Medical Center based in Charlottesville, earned performance pay totaling $199,002 in 2012.


•    Carlos Migoya, CEO of Jackson Health System based in Miami, donated his $160,000 bonus for raising net assets to charity in March. Terms of his 2012 contract made him eligible for as much as $295,000 for meeting financial targets.


•    Sheldon Retchin, MD, CEO of Virginia Commonwealth University Health System based in Richmond, was paid a $205,885 bonus for increasing profit and total surgeries, admissions and outpatient volume in addition to his $864,700 base salary. Dr. Retchin responded that more than 60 percent of his performance incentives pertained to academic or quality measures.


•    Richard Roodman, CEO of Valley Medical Center in Renton, Wash., earned a total of $1.2 million in 2012, including a $213,000 bonus. About one third of his bonus was related to expansion and financial goals. Volume benchmarks, including those for increased utilization of angioplasties and da Vinci robot-assisted surgeries, also carried financial incentives.


•    Michael Tarwater, CEO of Charlotte, N.C.-based Carolinas HealthCare System, earned $2.8 million in bonuses in 2012, $1.6 million of which was attributable to undisclosed financial goals. His total pay for the year was $4.8 million.


More Articles on Hospital Executive Compensation:

Report: Quality, Patient Say Will Have Bigger Role in Physician Compensation

Public Hospital CEO Pension Reform Makes Headway in California

Job Opening: : President and CEO, CTCA Tulsa/Southwestern Regional Medical Center

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