The wage gap between CEOs and average employees at U.S. nonprofit hospitals widened from 2009 to 2023, according to a study published in August in Health Affairs.
Researchers from the University of Chicago, Brown University in Providence, R.I., and Rand Corp. used IRS Form 990 and Medicare cost reports to examine data from 1,424 nonprofit hospitals. They found hospital CEOs earned about 10.2 times the average wage of hospital employees in 2009. By 2023, that ratio had risen to 12 times the average wage — a 17.6% increase.
Between 2009 and 2023, average CEO pay rose by 27.5% and top executive pay by 23.1%, while the average wage for all hospital employees (executives included) rose just 9.8%. Inflation-adjusted average annual CEO pay rose from about $814,000 in 2009 to $1.04 million in 2023.
The researchers also found a trend toward the “financialization” of nonprofit health systems, in which they adopt business practices and governance philosophies resembling those of publicly traded corporations and financial firms. They warned that, as this shift intensifies, nonprofit hospitals may become a primary source of wage inequality within the healthcare system.
“In light of nonprofit hospitals’ favorable tax status, measures of wage inequality may be considered in broader discussions of nonprofit hospitals’ contribution to their communities, including their effect on local economic inequality,” researchers noted.
The authors also found no evidence that the pandemic specifically increased wage disparities. The pay gap between CEOs and average hospital employees narrowed by 7.5% during the first year of the pandemic (2019 to 2020) as wages increased to retain staff, but then widened again with increases of 2.5%, 1.1% and 0.6% in each of the following three years, respectively.
