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Feb
14

Hospital CEO pay ≠ Outcomes

An excellent piece by Merrill Goozner highlighted – among other things – the disconnect between not-for-profit hospital CEO pay and their hospital’s ability to control costs. 

Merrill cited the Lown Institute’s analysis of hospital performance, DEI results, outcomes, cost and pay equity

Since 1996, hospital costs have risen about 2 1/2 times faster than overall inflation…

Why?

Quoting Merrill..

You’d think the boards of trustees at the nation’s non-profit hospitals, which account for 80% of all staffed beds in this country, would be up in arms over top management’s inability to keep prices and thereby patient costs under control. At the least, they might want to incentivize their chief executive officers and other C-suite staff to take cost control seriously.

Nope.

up to 40% of a CEO’s bonus depended on measures that directly affect hospital finances.

Not for profit hospitals are a BIG part our healthcare problem; most don’t care about rising healthcare costs, and they don’t tightly link CEO compensation to clinical outcomes.

Now I know why I had to pay $355 for ear wax removal.

What does this mean for you?

Hospital leaders’ and their boards’ priorities are not ours. 

Subscribe to Merrill’s posts here.


Joe Paduda is the principal of Health Strategy Associates

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A national consulting firm specializing in managed care for workers’ compensation, group health and auto, and health care cost containment. We serve insurers, employers and health care providers.

 

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