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Are Nonprofit Hospital CEOs Paid Too Much? (DS)

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Team 5 Investigates Uncovers Big Salaries, Raises

BOSTON — A Team 5 Investigates review of financial documents shows that in Boston, the average salary of executives at large, nonprofit hospitals is much higher than the national average, often topping $1 million per year.

NewsCenter 5’s Janet Wu reported Wednesday that their faces may not be familiar to most, but in the world of health care, hospital CEOs are giants in influence and salaries.

Among those earning top dollars: Elaine Ullian, president and CEO of Boston Medical Center, who earned $1,473,536 in 2007, the most recent year for which financial filings are available. Her total compensation jumped 33 percent since 2005.

James Mandell, MD, CEO at Children’s Hospital, earned $1,399,481 in 2007, including a bonus of $275,000. His 2007 salary represents a 30 percent raise since 2005.

Gary Gottlieb, president of Brigham and Women’s Hospital, earned $1,191,142 in 2007. Gottlieb is a medical doctor and has also earned an MBA, according to records filed with the state. His 2007 salary is 18 percent higher than it was in 2005.

Paul Levy, president and director of Beth Israel Deaconess Medical Center earned $946,535 in 2007, 5 percent less than he earned two years earlier.

Lynn Nicholas, CEO of the Massachusetts Hospital Association, defended the compensation, saying, "Hospitals generally are the largest employer in any city. They are very complex organizations that have 24/7 accountability. And they are different from other businesses."

But Ellen Zane, president and CEO at Tufts Medical Center, earns even more, just under $1.9 million in 2007. Her spokesman attributed it to a three-year, lump-sum bonus and a change in the tax code.

Dana Farber Cancer Institute’s president, Edward Benz, earned a more modest $805,448 in 2007, but records show he received a $600,000, interest free mortgage. A hospital spokesperson confirmed to Team 5 Investigates that Benz is one of six executives at DFCI who was offered the zero-percent mortgage as an incentive while being recruited to the hospital.

How do hospitals justify these high salaries at a time when the average consumer struggles to pay his or her insurance and medical bills?

Nicholas: "We do need to work on bringing the cost of health care down and that’s exactly why you need talented executives who are capable of making that change and transition."

Wu: "But some people would argue they have not been very successful in bringing the costs down yet their salaries have gone up."

Nicholas: "Keep in mind that it costs about 30 percent more to live and work in Massachusetts than it does in other states, on average."

Republicans are taking a hard look at the salaries of nonprofit hospital executives.
Republican lawmakers in Washington, D.C., are taking a hard look at the high salaries paid to nonprofit hospital chiefs as President Barack Obama prepares his health care reform package.

The nonprofit status grants significant tax breaks to the operations, similar to those received by charitable organizations.

According to an Internal Revenue Service review of 485 hospitals across the country, presidents of nonprofit hospitals earn an average salary of $500,000.
Nicholas insists hospital executives are no different than those at for-profit companies. One benefits shareholders, the other benefits the community in general.

She also said nationwide, the average hospital CEO salary is less than 0.2 percent of the hospitals net revenue. Despite that, she conceded to Wu that the salaries in Massachusetts are far above the national average.

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