Hospital CEO pay hits the Hill

Hospitals have denounced criticism from Sen. Bernie Sanders, I-Vt., about their charity care policies. But the issue of CEO pay has been less addressed and appears to be one the lawmaker will hold onto. 

The American Hospital Association hit back after Mr. Sanders' Senate Health, Education, Labor and Pensions committee released an Oct. 10 report about nonprofit hospitals' tax breaks, calling information about hospitals' community benefit in the eight-page document "just plain wrong."

Executive pay is one part of the senators' argument that received no acknowledgement in the AHA's retort. The Senate HELP committee considered 16 of the largest U.S. nonprofit health systems in its report, noting that most faltered in their charity care levels while paying "significant compensation packages" to senior executives. 

"In 2021, the most recent year for which data is available for all of the 16 hospital chains, those companies' CEOs averaged more than $8 million in compensation and collectively made over $140 million," the report states. 

On Oct. 27, the Senate HELP committee will hold a hearing in New Brunswick, N.J., centered on the nurses' strike at Robert Wood Johnson University Hospital, which began Aug. 4. 

"At this hearing, I look forward to hearing from the nurses as well as the hospital management," Mr. Sanders wrote in a statement. "I am especially interested in hearing from Mark Manigan, the President of RWJBarnabas Health which owns the Robert Wood Johnson University nonprofit hospital."

Mr. Manigan took the helm of the health system as president in 2022. Mr. Sanders said he is looking forward to how the RWJBarnabas system could afford to spend over $17 million on CEO compensation in 2021, "but somehow cannot afford to mandate safe staffing ratios to improve the lives of patients and healthcare workers." 

Mr. Sanders has long been a proponent for controls on CEO pay. In 2021, he and colleagues proposed the Tax Excessive CEO Pay Act, legislation to impose tax rate increases on companies with CEO to median worker ratios exceeding 50:1. The bill is in committee. 

Across industries, CEO pay has catapulted in recent years and is under greater scrutiny in a period of high union organizing. Criticism is reaching Capitol Hill and reiterated by lawmakers seeking solidarity with workers amid prolonged strikes. 

"Right now, the CEO of GM makes 362 times what its median worker makes. At Ford, it's 281 times," Sen. Sherrod Brown, D-Ohio, said last month in regards to the United Auto Workers strike. "So I don't want to hear whining from these companies that they can't afford to pay workers what they're worth."

Regardless of whether one sees executive pay as appropriate or too high, its variation across settings is real. A 2022 analysis by the Lown Institute of more than 1,000 hospitals found the gap between hospital CEO pay and average worker pay varied widely, with some CEOs paid twice the rate of other workers, while the highest paid received 60 times the hourly pay of general workers. 

Earlier in the pandemic, as hospitals and lawmakers urged federal authorities to investigate travel staffing agencies for price-gouging, some travel nurses reciprocated and said such scrutiny should actually be redirected toward health systems' executive pay. 

In California, Los Angeles voters are set to vote next year on a measure that would cap the total compensation of executives, managers or administrators at privately owned hospitals in Los Angeles at $450,000. The cap is equal to compensation of the U.S. president — $400,000 annually with an expense allowance of $50,000. 

Copyright © 2024 Becker's Healthcare. All Rights Reserved. Privacy Policy. Cookie Policy. Linking and Reprinting Policy.


Featured Whitepapers

Featured Webinars