Highest-paid hospital CEOs work at facilities with higher patient satisfaction scores, a new study has found.
The study, published in JAMA Internal Medicine, looked at nearly 2,700 nonprofit hospitals nationwide to explore what factors may or may not affect CEO compensation. Researchers examined 2009 data from seven sources that included 1,877 CEOs responsible for 2,681 hospitals.
Karen E. Joynt, co-author of the JAMA study and instructor in the Department of Health Policy and Management at Harvard School of Public Health in Boston, said that she and her co-authors were motivated to conduct the study because little information is known about how hospital CEOs are paid.
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“We constructed the study by looking at hospitals in different areas, size of the hospital, number of beds, financial metrics, quality metrics, patient satisfaction scores, community benefit, amount given in charity care, levels of technology,” she said. “We wanted to see if CEO compensation reflected on any of these factors.”
The researchers found that compensation for CEOs at nonprofit hospitals varies greatly across the country but averages at around $600,000. CEOs paid the least (a median compensation of $117,933) were from small, nonteaching hospitals in rural areas. The highest paid CEOs (with a media compensation of more than $1.6 million) were from larger, urban hospitals that were often teaching hospitals.
Hospitals with higher patient satisfaction scores tended to have higher-paid CEOs, according to the study. Advanced technology at the hospital also was associated with substantially higher CEO pay.
The factors that didn’t seem to have much of an impact on CEO compensation include a hospital’s provision of charity care, financial performance, or performance on various process qualities, mortality or readmission rates, said Joynt.
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“I think what this study shows is that there is room for improvement in the way hospitals think about CEO compensation,” said Joynt. “We want our healthcare systems to be thinking about value, better patient outcomes. The data showed that CEO compensation didn’t correlate as well with some of the factors we feel it should have.”
Joynt noted that because the study was based on 2009 data, CEO compensation has likely shifted in the last few years.
“We’d like to do a follow-up study to see how this has changed overtime. Have hospitals started to reward their CEOs based on quality outcomes or any of these other factors?” she said. “I think while this could have been a missed opportunity in the past, this is now a chance for us in the future to encourage our hospital leadership to drive toward better quality, efficiency and patient outcomes.”
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