Some CEOs Get High-Flying Job Perks
Editor's Note: This story has been updated to include a response from Kaiser Permanente.
Many hospital CEOs in California not only enjoy pay packages well into the six and seven figures, but perks such as first-class travel and club memberships paid for by their employer.
Such benefits did not have to be disclosed by non-profit hospitals and healthcare systems in the past, but tighter regulations issued by the U.S. Treasury Department in recent years has required them to be more forthcoming regarding the non-cash compensation and other fringe benefits bestowed on executives.
Claudia Wyatt-Johnson, a Chicago-based healthcare compensation consultant, noted that the practice among her clients in the Midwest has declined in recent years.
“We have encouraged them not to offer such perquisites,” she said. “The IRS reacts poorly to it, and (lower-level) employees often act poorly to it.” She added that many providers would be better off giving more cash compensation instead.
Nevertheless, the CEOs of the biggest healthcare systems are allowed first-class travel for themselves and occasionally their spouses, according to the tax returns examined by Payers & Providers.
For example, the CEOs and many senior executives of the California's three largest healthcare systems – Sutter Health, Kaiser Permanente and Dignity Health – all are provided first-class travel accommodations for themselves and their spouses or companions, with the latter often requiring approval by the system's board of directors.
For Kaiser's CEO, “non-business transportation is board approved and included in compensation,” according to the organization's 2013 tax return. Kaiser spokesperson John Nelson noted that the reference is to the fact "a licensed security professional accompanies our CEO when he travels by car."
Dignity Health paid $40,868 to pay for first-class travel for five officers, directors and key employees in 2013, according to its tax return.
Sutter Health allows its top executives first-class travel “as business need dictates.”
Several hospital CEOs also have country or social club memberships paid for, typically for the purposes of business networking.
Henry Mayo Newhall Memorial Hospital in the Santa Clarita Valley alluded to paying for club memberships for its CEO Roger Seaver and C.R. “Bob” Hudson, its chief financial officer. “Roger Seaver does not golf at all but is allowed to host community leaders, foundation and hospital board members or other leaders of the community and their guests periodically, and on a limited basis. C. R. Bob Hudson pays any cost over and above the membership dues for his personal golf, which is very
limited (under 18 rounds per year),” said a note on the hospital's 2013 tax return. “Both memberships are used as donations to other charities' auction items on a limited basis.”
Huntington Memorial Hospital in Pasadena pays for two club memberships for its CEO, Stephen Ralph. The two clubs, the Valley Hunt Club and the Athenaeum Club, are among the most exclusive social clubs in all of California.
In 2004, the Los Angeles Times described the Valley Hunt Club as “a throwback to the wealth and manners of a bygone Los Angeles...an invitation-only sanctuary of bluish bloodlines and faintly English airs that clings to its traditions as the city changes around it.” The article quoted a California historian as saying "The Valley Hunt has preserved the status quo and realm of privilege, and the people who occupy that realm of privilege maintain a stability.”
The Athenaeum, which is on the grounds of Cal Tech, is slightly less exclusive, but caters primarily to Pasadena's academic elite.
The Payers & Providers C-suite compensation survey can be purchased here.
