The average income of senior executives is 8 times that of non-management caregivers in the hospital, with a maximum difference of 60 times.
Writing | Yan Xiaoliu
Source | “Medical Community” Public Account
“I contracted the new crown at work. After I recovered, I was named ‘Excellent Employee of the Month’. The department rewarded me with a canteen gift certificate, worth $6 (equivalent to RMB 38).” Jamelle Brown shook her head with a wry smile.
Jamelle Brown works in the Environmental Services Department at Research Medical Center in Kansas City, Missouri, USA, where she is responsible for routine sanitization work in the emergency room.
The 590-bed center is part of the Hospital Corporation of America (HCA). The latter is the world’s largest for-profit health service operator.
As of December 2020, HCA operates 185 hospitals, 121 surgery centres and 21 independent endoscopy centres in the UK and the US, as well as more than a thousand doctors’ clinics.
HCA gains $51.5 billion in 2020, with pretax earnings up 3.6%. The performance brightened HCA Chief Executive Officer (CEO) Samuel N. Hazen’s face and pockets: his 2020 annual salary rose 13% from 2019 to $30.4 million.
This is 556 times the median pay of HCA employees and 1,000 times the pay of Jamelle Brown.
“My heart is broken.” Jamelle Brown told NBC News that, as of August 2020, when she was infected, she had worked at the center for four years and had not received a raise in the last two years. “I didn’t accept the gift certificate. I told the person in charge that this place was not for me.”
Jamelle Brown presents her Employee of the Month award. /NBC News
The large income gap between bosses and employees is not unique to medical institutions. But the result can be “killing”.
In February 2022, Health Affairs, an authoritative international health policy research journal, published a survey by the Lown Institute, a medical think tank.
The survey analyzed the data of more than 1,000 non-profit medical institutions in the United States and found that the average income of senior management is 8 times that of non-management medical nurses in the hospital, and the maximum difference can be as high as 60 times.
“Hospitals are often the largest employers in their area. How much they pay their staff can have a significant impact on the financial stability of the community as a whole. We found that there is a large pay gap between nurses and superintendents. To a certain extent, it also reflects the hospital’s economic operation mechanism and goals, which are inconsistent with the hospital’s social goals. This may not be a good thing for medical services and patient safety.” said the Lorne Institute article.
Non-Profit Healthcare ‘No Pay Equity’
In the U.S., the healthcare industry has high incomes and is an “established perception.”
The 2021 Medscape Salary Survey shows that the average annual income of doctors in different departments is between $221,000 and $526,000. In 2017, Glassdoor selected the top 25 paid jobs in the United States, and doctors came out on top. Also on the list are medical liaison officers, pharmacists, physician assistants and nurse practitioners.
But these are nothing compared to the hospital executives.
The Lorne Institute combined the “Lorne Institute Hospital Index” (hereinafter referred to as the “Hospital Index”) to analyze the data of 1097 non-profit medical institutions and found that the average hospital top management The hourly rate is $249. The average hourly wage for non-managerial healthcare skills is $29.
This varies widely from institution to institution. Some institutions have a dean/staff pay ratio of 2:1. Up to 60:1.
Image via Lown Institute Hospitals Index
The analysis also revealed a relationship between hospital size and executive compensation.
“Volumes matter, especially high-margin ones. It’s one of the basic business models for nonprofit medical institutions to develop.” Researchers say that as hospitals expand, full-staff salaries will increase, but the salary increases for senior executives often far exceed those for employees. For each additional available bed in the hospital, the average hourly salary of the top executives may increase by $550.
Specifically:
When hospital beds <50:
Average hourly salary for deans: $130
Dean Salary:Other Staff Salary=6:1
50-99 beds:
Average dean hourly wage: $179
Dean Salary:Other Staff Salary=6:1
100-199 beds:
Average dean hourly wage: $239
Dean Salary:Other Staff Salary=8:1
200-399 beds
Average dean hourly wage: $335
Dean Salary:Other Staff Salary=10:1
Number of beds>400:
Average dean hourly wage: $517
Dean Salary:Other Staff Salary=14:1
Image via Lown Institute Hospitals Index
Size isn’t the only characteristic that affects compensation. According to the “Hospital Index”, this is also related to the city where the hospital is located, whether it is a teaching hospital/teaching status, etc.
Overall, large, urban, major teaching hospitals are almost equal to “high income for directors.”
In large hospitals with more than 400 beds, the hourly wages of directors are also very “rolled”, ranging from $88 to $3,289.
Image via Lown Institute Hospitals Index
Hospital top-level income is an “outlier”
The Lorne Institute’s survey is the first to test a “rumor” that pay levels at the top of medical institutions “are an outlier” in the US nonprofit industry.
A 2021 report indicates that at most nonprofits, the average annual compensation for senior management is $100,000 to $200,000.
with two exceptions. One is the president of colleges and universities, with an average annual salary of $350,000. The other is the top hospital administrator (the president or CEO), who earns an average of $600,000 a year.
In individual cases, some amounts are so large that they pop off the eye. In 2019, the CEO of nonprofit medical group Ascension Health made $13.6 million. Forbes said he made $59.1 million when he added up his compensation from 2014 to 2017.
If it is estimated by a single institution, when the annual income of the institution is equal, the income of hospital directors still has a crushing advantage.
For example, in 2017, the top 10 paid nonprofit medical executives each earned at least $7 million per year.
The American Red Cross has 600 branches and generates $3.6 billion in annual revenue. Its highest-paid branch executive earned about $800,000 in 2018.
In the same period, annual revenue for the Ochsner Medical Center in New Orleans, USA, was $3.4 billion. The dean of the hospital has an annual income of $5 million, which is the sum of the top 10 top earners of the American Red Cross.
Why is the Dean “more and more expensive”?
The Lorne Institute points to a decades-long upward trend in top-level salaries at nonprofit hospitals.
In the 1960s, with the advent of health insurance and increased coverage, hospital revenues began to climb. Many medical institutions took advantage of the situation to upgrade, from a non-profit organization serving the community to a group, and then went public.
A large number of management positions began to be created within the organization, and more administrative staff were hired. Slowly, the new members bring their values and experience in the for-profit world into the medical facility.
Today, the primary role model for nonprofit healthcare organizations is the for-profit public company, which is deeply researched in management culture, quality standards, and performance metrics. When hospitals recruit management, salaries and performance evaluations also refer to for-profit institutions.
A Connecticut study of 35 nonprofit hospital directors found that between 1998 and 2006, their compensation was linked to hospital performance indicators. Deans empowered hospitals to curtail aid programs for poor, Medicare patients, and to encourage more privately insured patients. Since then, the income of the institution has increased, and the deans have successively increased their salaries.
A similar situation occurred in China. The 2019 “Influence of Public Hospital Presidents’ Compensation Incentives on Hospital Performance” shows that for hospital directors, hospital development and compensation are the two main factors that motivate the director’s work. The dean’s salary is linked to the hospital’s performance indicators, which will prompt the hospital to work hard towards the assessment indicators, which may ignore the overall development of the hospital.
COVID amplifies the gap
From 2005 to 2015, the average salary of chief nonprofit hospital directors increased by 93 percent, according to the Economic Policy Institute. Over the same period, the average salary of other hospital staff rose by just 8%.
The COVID-19 pandemic has exacerbated this pay inequality even further.
NBC News reported that although some executives of medical institutions took the initiative to “cut pay” during the epidemic to support the institution through financial difficulties, more than 80% of US medical institutions have made extensive layoffs and reduced wages. Salary, while giving bonuses to senior management.
“Not-for-profit hospitals and their CEOs are getting richer, but people’s health care is ‘getting poorer’,” Forbes said.
Lorne Institute survey says it’s time to openly discuss hospital pay equity and create pay equity metrics. “Non-profit hospitals should be committed to improving public health and community health. Their size and income are not the true value of a hospital.”
“There needs to be a set of compensation metrics that motivate the dean and fulfill the hospital’s social mission. For example, the dean should be rewarded for improved clinical outcomes, improved patient safety, and improved community health. “
Source:
1.Average CEO pay by hospital size. Becker’s Hospital Review
2. Nonprofit Hospital CEO Compensation: How Much Is Enough?. Health Affairs
3.CEOs of public U.S. firms earn 320 times as much as workers. Even some CEOS say the gapis too big. NBC News
4.Hospital industry’s highest-paid CEO made more than $51M in 2016. Becker’s Hospital Review
5. Top U.S. “Non-Profit” Hospitals & CEOs Are Racking Up Huge Profits. Forbes
6. The impact of public hospital president compensation incentives on hospital performance. China Health Policy Research, 2019, 12(3): 38-44. DOI: 10.3969/j.issn.1674- 2982.2019.03.006
Source: Medicine
Editor in charge: Zheng Huaju
Proofreading: Zang Hengjia
Plate making: Xue Jiao