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Hospital CEOs face pay freezes amid recession

Most executives got pay raises of 14 percent or more from 2007-08

Critics question benchmarks used to set hospital CEO pay

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By Ben Sutherly, Staff Writer Updated 5:56 PM Saturday, January 2, 2010

The double-digit pay increases that most local nonprofit hospital chief executives received in 2008 evaporated in 2009 as the recession deepened.

Premier Health Partners, the Miami Valley’s largest hospital network, didn’t raise base pay — but did give bonuses — to its top executives in 2009, while the typical employee received a 2.5 percent raise, said Tom Breitenbach, Premier’s chief executive officer.

In 2010, no Premier workers will get salary increases, and top executives have been asked to take a 2 percent cut in base compensation, Breitenbach said. Premier’s top nine executives’ base and incentive pay will be capped at 2009 levels, he said.

“We’re trying to take into account some of the economic trauma,” said Breitenbach, whose compensation and that of other hospital CEOs are reviewed and approved by executive compensation committees.

The Dayton Daily News reviewed Internal Revenue Service records for nine local nonprofit hospital chief executives and gave each executive opportunity to comment directly or through a spokesperson. Only Breitenbach chose to do so.

Kettering Health Network froze pay for more than 100 executives in 2009. Other employees received a 2 percent pay hike, according to a KHN spokesman.

Bonuses for KHN CEOs for 2008 were temporarily withheld in spring 2009, given the uncertain financial outlook, but were awarded in November.

The smallest increase in pay for local hospital CEOs from 2007-08 — including base salary, bonus and incentives — was 6.4 percent. Most got increases of 14 percent or more.

The pay raises predated the recession. In some cases, the significant gains were an anomaly.

As CEO of Kettering and Sycamore medical centers in 2008, Fred Manchur collected a 10-year retention bonus upfront to use for housing. That swelled his total reportable compensation in 2008 to $1.85 million, nearly double his total compensation the previous year.

Manchur became president of Kettering Health Network on Jan. 1, 2009. He has to repay the retention bonus if he leaves early.

Compensation is key to retaining top talent, said Pete Luongo, who sits on the compensation committee of Kettering Adventist Healthcare, parent of Kettering Health Network.

“That business is so complex, ... to be able to manage it and lead it in the environment we’re in today is almost impossible,” he said. “I don’t think there’s any question (they’re compensated fairly), and anybody who wants to challenge me on that, I would love to sit down and chat with them about it.”

Critics argue less emphasis should be placed on what executives at comparable hospitals are making in determining compensation for nonprofit CEOs.

“CEO compensation needs to be tied to outcomes based on what’s good for the community, as well as what’s good for the institution,” said Cathy Levine of the Universal Health Care Action Network of Ohio, which is pushing for broader health-care coverage. “I think the CEO compensation packages reflect corporate America, and we need more than that from health care.”

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