Hospital CEO Pay Not Tied to Quality Outcomes

A new study published in JAMA Internal Medicine finds that hospital CEOs' pay isn't linked to their hospital's benefit to the community. Nor is it linked to the quality of care the hospital provides. Instead, the CEOs tended to earn more at hospitals with high patient satisfaction ratings and advanced technology. They looked at CEO paychecks in 2009 alongside hospital size, quality and other data from 2008, figuring salaries and bonuses might be tied to the prior year's figures. The study included 1,877 CEOs from 2,681 private, non-profit hospitals across the country. The average executive earned about $596,000.

Executive paychecks at hospitals varied widely. The CEOs with salaries and bonuses in the lowest 10 percent earned $118,000 a year, on average. They mostly worked at small, non-teaching hospitals in rural areas. On the other end of the spectrum, executives in the highest 10 percent earned almost $1.7 million. They tended to head up large teaching hospitals in cities. CEOs at hospitals that had more beds and more advanced medical technology made more money than those at other hospitals, the researchers found.

And executives tended to earn more when more of their hospitals' patients reported being very satisfied with their care. However, the hospital's own bottom line, including how often its beds were occupied, was not linked to a CEO's pay. Neither were commonly used measures of a hospital's quality, such as mortality rates and readmissions.