Hospital CEO compensation: Does it measure up?

January 12th, 2015

With little information known about hospital CEO pay and compensation, a new study, published Monday in JAMA, is reporting that hospital CEO’s pay is not linked to good patient outcomes. Rather, CEOs earned more at hospitals with the most beds, high patient satisfaction ratings, and advanced technology.

The study, completed by colleagues at the Harvard School of Public Health in Boston, pulled data from tax returns, hospital surveys, and performance and cost reports from 1,877 CEOs at 2,681 private, non-profit hospitals across the U.S.

They found average compensation to be $595,781, with the least compensated responsible for mostly small, non-teaching hospitals and the highest paid responsible for larger, urban teaching hospitals.

In contrast, the researchers found that how often the hospital beds were occupied, how many patients died in the hospital, and readmission rates, along with other commonly used quality measures, were not linked to CEO compensation.

The results were "a little disappointing," says study author Ashish Jha, a health policy professor at Harvard's School of Public Health. To not hold CEOs accountable for whether patients live or die within 30 days of treatment “doesn't quite make sense,” he says. He suggests the study results are a message for hospital boards that decide CEO compensation: "If you really care about patient outcomes, here's a place to look."

On the other hand, in a commentary published with the study, Warren S. Browner, MD, MPH, California Pacific Medical Center, San Francisco, CA, disputes the study’s conclusion and says CEOs may be compensated based on other quality measures that weren't considered in this study. Browner also states that using death and readmission rates as a comparison can be misleading because of disparities in such rates among hospitals that treat a higher proportion of very sick patients.

The study concludes, "Among the quality metrics we examined, only patient satisfaction was consistently associated with CEO compensation."

Source 1. JAMA Intern Med. Published online October 14, 2013.