Pittsburgh-based UPMC's aggressive growth strategy, executive compensation and tax-exempt status has attracted a fair amount of scrutiny. However, Nicholas Beckwith, chairman of UPMC's board of directors, defends the health system's business acumen to and CEO Jeffrey Romoff's paycheck, according to a Pittsburgh Tribune-Review report.
Mr. Beckwith has served as UPMC's chair since 2002. He entered the healthcare industry in the late 1970s when a family friend asked him to serve on a committee at Shadyside Hospital in Pittsburgh, where he became board's chairman in 1990. Mr. Beckwith met Mr. Romoff for the first time in 1995 when Shadyside was considering a partnership with UPMC. According to the report, Mr. Beckwith instantly liked Mr. Romoff. Shadyside and UPMC finalized a merger deal in 1997, and since then the two have formed a strong bond.
UPMC, Pennsylvania's largest employer, has more than 62,000 employees, according to the report. The systems must generate excess cash flow to remain solvent, Mr. Beckwith told Tribune-Review reporters. Since becoming chairman, UPMC's operating income has grown from $52 million to $190 million in fiscal year 2014.
"Those people are nuts," Mr. Beckwith told the Tribune-Review regarding those who criticize UPMC's margins and and Mr. Romoff's pay. "A company, to succeed, has to be profitable but eminently successful. A nonprofitable nonprofit is nothing; it's gone. It's bankrupt."
Mr. Beckwith called Mr. Romoff a brilliant leader, and stood by the board's decision to pay Mr. Romoff $6.6 million a year — one of the highest CEO salaries for nonprofits in the region, according to the report. Two dozen UPMC executives each make more than $1 million.
Mr. Beckwith says under Mr. Romoff's leadership, UPMC has expanded from just a handful of hospitals to 20, covering ground from Western Pennsylvania to Italy. The board has no plan to replace him.
"When people ask me about his pay, I say, 'What would you pay him?' If they're going to understand the brilliance of Jeffrey Romoff, they have to acknowledge there's no more effective leader in the nation than Jeff Romoff," Mr. Beckwith told the Tribune-Review.