Mayo Clinic defends executive raises

Mayo Clinic returned to raises for its executive team in 2021 with top-paid employees seeing the largest increases of 20 percent or more, the Rochester Post Bulletin reported Dec. 8.

Financial hits brought on by the COVID-19 pandemic in 2020 left many Rochester, Minn.-based Mayo Clinic executives taking small pay cuts. Compensation for CEO Gianrico Farrugia, MD, dropped 1 percent, for instance. 

The next year, Mayo returned to raise executive pay, with a total of 26 employees reporting compensation of more than $1 million in 2021. That tally is up from 23 in 2020 and 21 in 2019.

In 2021, Dr. Farrugia's compensation increased by 27 percent to $3.48 million. Then-Chief Administrative Officer Jeff Bolton's compensation increased by 24 percent to $2.11 million. Kent Thielen, MD, CEO of Mayo Clinic in Florida, saw his compensation increase by 20 percent to $1.79 million and Richard Gray, MD, CEO of Mayo Clinic in Arizona, saw his compensation increase 26 percent to $1.78 million in 2021.

"Mayo Clinic is the top-ranked healthcare provider in the country in large part because of our staff," system spokesperson Ginger Plumbo said in a statement to the Rochester Post Bulletin. "A structured compensation program has been used for salaries at Mayo Clinic for more than 45 years to remove financial incentives to do more than is necessary or less than required for the patient. There are no incentives or bonus pay. Executive compensation is no exception to this model and is necessary to deliver on our plan to cure, connect and transform healthcare."

Mayo Clinic has been an outlier throughout 2021 and 2022 for its financial performance. As many health systems report large losses and fallen margins, the system posted $1.2 billion in net operating income for 2021. More recently, the system reported net operating income of $157 million on $4.12 billion for the third quarter of 2022 with an operating margin of 3.8 percent. 

This fall, Mayo announced it would raise pay by 6 percent in early 2023 for about 64,500 allied health staff — a change it described as the biggest across-the-board pay jump in more than two decades. That comes in addition to raises of 3 percent across all allied health job categories. 

Mayo has a 73,000-person workforce.


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