Sen. Chuck Grassley Questions Hospital CEO Bonuses

In light of a recent news story that showed how many nonprofit hospital and health system CEOs still predominantly receive bonuses based on volume-based financial metrics, Sen. Chuck Grassley (R-Iowa) plans to continue probing how the nonprofit hospital sector conducts its business.

Kaiser Health News and ABC News unveiled a report earlier this week that showed many hospital boards reward their CEOs with volume-based revenue goals, suggesting hospitals' transition to a compensation system based on quality and value metrics has been slow at best.

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

Sen. Grassley said many of the systems outlined in the report have hospitals that are eligible for the government's 340B discount drug pricing program, which allows hospitals to obtain outpatient drugs at reduced prices if they treat a large number of low-income patients. Sen. Grassley has previously blasted three health systems in North Carolina — Carolinas, Durham-based Duke University Health System and Chapel Hill-based UNC Health Care — for profiting off the 340B program.

"Hospitals eligible for the 340B program are supposed to have a high indigent patient population. If some 340B-eligible hospitals have significant money available for executive bonuses, that raises questions about how they allocate their resources," Sen. Grassley said in a statement. "Are they doing everything possible to help uninsured patients receive healthcare, including affordable prescription drugs?"

More Articles on Hospital CEO Compensation:
As Hospitals Move Toward Fee-for-Performance, CEOs Still See Pay for Volume
Public Hospital CEO Pension Reform Makes Headway in California
12 Statistics on Rural Hospital CEO Compensation

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