In its Aug. 11, 2014, edition, Modern Healthcare inaccurately reported compensation data for Dr. Ronald Paulus, chief executive officer of Mission Health, by using partial year salary data for his base compensation in 2011. Dr. Paulus in fact received a less than 1 percent base salary increase and should not have been included in the chart. Modern Healthcare regrets the error.
Original post Sept. 3: An analysis by Modern Healthcare shows that Mission Health CEO Ron Paulus was the big winner when it comes to core salary increases for executives at not-for-profit heathcare systems. In 2012, the most recent year with full data available, Paulus saw his base compensation go from $226,497 to $749,748, a stunning 231 percent increase.
Modern Healthcare notes the ongoing public ire at the big money payouts, adding that executive pay in this arena is increasing at a far faster pace than average worker salaries.
In July, Paulus told the Asheville Citizen-Times that he’s telling Mission employees to brace for cutbacks. Last year, Paulus said he would cut his pay 26 percent for 2014, and other senior Mission leaders would see their pay cut from 13 to 20 percent. From the story:
Mission Health predicts a $500 million decrease in payments over the next decade as more people get medical care outside of hospitals and reimbursements from Medicare and Medicaid decline. Seventy-five percent of Mission’s patients are covered by Medicare and Medicaid.
Included in that amount is $228 million the company says it will lose under the Affordable Care Act, also know as Obamacare.
Short-term fixes like freezing raises and vacation allocation are not good solutions, he said. The system used them, and deep salary cuts for hospital executives, to save $26 million last year.
The company is looking at everything from services and procedures to staffing levels to billing and payment collections across all its locations, including its five rural hospitals.
From Modern Healthcare:
Total cash compensation grew an average of 24.2 percent from 2011 to 2012 for the 147 chief executives included in Modern Healthcare’s analysis of the most recent public information available for not-for-profit compensation. Of those 147 CEOs, 21, or 14.3 percent, saw their total cash compensation rise by more than 50 percent. Another 51, or 35.7 percent, received total cash compensation increases of 10 percent or higher. The data came from Form 990s filed by the not-for-profit systems to the IRS for 2011 and 2012.
Hospital systems, their boards and outside compensation consultants justify these raises as adjustments necessary to keep pace with what the market dictates and to compete for talent that might flee to more lucrative for-profit positions.
The story goes on to note that critics say the high salaries undermine the message that the not-for-profit’s core business is mission-driven. “It is somewhat unique in the nonprofit sector that you have a class of CEOs that are working for public charities that are becoming millionaires,” said Ken Berger, president and CEO of Charity Navigator.