Seven-Figure Pay, Two-Bit Answers
The Association of Health Care Journalists didn't exactly provide a “dunk your boss” booth at its annual conference in Boston last week, but one of the sessions proved pretty darned close.
It included a panel with a journalist, an academic and an executive who discussed how “rich” and “poor” hospitals charted courses for business survival. The executive was Kate Walsh, CEO of Boston Medical Center.
Walsh ostensibly represented the “poor” hospital, as her facility is located in Boston's South End. Half of the facility's patients are Medicaid recipients, and she told the audience how she had engaged in layoffs since her appointment in March 2010 in order to cut costs.
Out of curiosity, I downloaded Boston Medical Center's 2010 tax return onto my smartphone and started skimming through the pages. Despite being on the payroll for just nine months that year, Walsh received $1.34 million in compensation. Based on the 50-hour workweek Walsh claimed on the 990, that works out to $653.85 an hour, or just under $1.7 million for a full year.
I've been writing about the compensation of non-profit hospital CEOs in Payers & Providers for years now, breaking down and analyzing available data in California and elsewhere. Not once had I been able to obtain a direct interview with a CEO to discuss their pay; I've been consistently channeled through the public relations departments of individual institutions.
At the end of the presentations, I would have a chance to ask a member of the so-called “seven-figure club” why they deserved the pay they were getting.
I was on the fence about asking Walsh why she should command that pay at a hospital so dependent on federal taxpayer dollars to remain in operation. But Walsh then discussed the need to retrain people who had had their pension benefits restructured and now face an uncertain retirement. I then had no problem popping the question to someone whose retirement and deferred compensation topped $400,000 in lieu of nine months of work.
“Oh, come on!” Walsh responded in exasperation and initially waved off the question.
Is there someone competent out there who could do your job for $500,000 a year? I asked, thinking to myself that the extra $1.2 million in savings could probably be used to treat 100 or so uninsured inpatients or 1,000 or so outpatients.
“Maybe.”
Walsh spent much of the rest of the question-and-answer session resting the side of her face in the palm of her hand, likely considering one more layoff: The PR specialist who thought having her appear at this event was a good idea. Indeed, two more audience members pressed her on her pay after I broke the ice.
Walsh's response to the multiple queries: She's paid at the 50th percentile for CEOs of hospitals the size of Boston Medical Center, and she's heading an organization with revenue of $2.5 billion a year. “People are asking (me) to make the right calls,” she said. She sounded very much like all the hospital PR people to whom I have posed this question.
Alan Sager, a professor at healthcare management at Boston University, furnished a blunter answer: “This country pays CEOs far more than counterparts running more successful companies overseas. It's an American problem, and it's a score-keeping problem,” he said. That Sager was a fellow panelist sitting right near Walsh added some piquancy to his response.
I followed up with Walsh after the panel broke up. “I don't do this for the money,” she said. For some reason she looked like she wanted to leave.
You may or may not be able to take that answer to the bank. But Walsh and a lot of other CEOs of not-for-profit safety net hospitals are long past needing to anymore.
