Healthcare CEO pay climbs steadily since ACA passage

Dive Brief:

  • Earnings of healthcare CEOs have continued to grow under the Affordable Care Act (ACA) and the pay packages give them little incentive to rein in spending, a new Axios analysis concludes.
  • Since the ACA was passed in 2010, CEOs of the 70 largest healthcare companies have cumulatively earned a whopping $9.8 billion — or almost 11% more money on average each year. However, because most of the pay is in vested stock, CEOs often base decisionmaking on what boosts stock prices (e.g., bigger sales, more tests and procedures) and not the ACA goals of patient-centered, value-based care.
  • The analysis was based on financial reports from 70 publicly traded U.S. healthcare companies comprising more than $2 trillion in annual revenues. Not-for-profit hospital CEOs were not included.

Dive Insight:

The biggest payout — $863 million — went to John Martin, CEO of biotechnology company Gilead Sciences, according to the analysis. Other takeaways include:

  • Just four of the 113 healthcare CEOs in the analysis were women
  • 11 of the top 20 top earners were CEOs of pharma and drug-related companies;
  • CEOs earned a little less as a whole last year versus 2015 due to market uncertainty over the presidential election.

Rising salaries are drawing increased scrutiny and some pushback. In April, North Carolina lawmakers approved a bill that would bar compensation for CEOs of behavioral health managed care organizations from exceeding by more than 30% the average salary of other behavioral health managed care businesses in the state. The bill seemed targeted at Cardinal Healthcare Innovations CEO Richard Topping, whose salary was $435,000 more than the average salary for a managed care organization in the state.

Salaries of executives at nonprofit organizations have also been growing. According to a Wall Street Journal report in March, many nonprofits are embracing salary strategies used in the for-profit world and offering packages totaling more than $1 million, with possibility of bonuses and deferred payments. In 2014, about 75% of nonprofit pay packages totaling $1 million or more went to healthcare executives.

In Massachusetts, in fact, pay for hospital CEOs outpaced state health spending. The largest compensation package went to Elizabeth Nabel, president of Brigham and Women’s Hospital, who received $5.4 million in 2014, up 119% from the previous year. By contrast, overall healthcare spending in Massachusetts rose 4.8% that year.

In an analysis earlier this year, Axios found that Sutter Health CEO Patrick Fry gets paid the most per patient stay ($6.88 a day) among the 20 largest hospital systems. Greenwich Hospital CEO Norman Roth earned the most ($56.40 a day) among other studied hospitals.


Building a ‘nimble’ multi-state health system: 5 questions with Ascension CEO Dr. Anthony Tersigni

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With 2,500 sites of care — including 141 hospitals and 30 senior living facilities that sprawl across 23 states and Washington, D.C. — St. Louis-based Ascension may not seem well-suited to make sudden business changes. But Ascension President and CEO Anthony Tersigni, EdD, aims to make the nation’s largest nonprofit health system into one of America’s most agile hospital networks.

Here, Dr. Tersigni discusses the system’s recent national rebrand, how he instills a spirit of risk-taking and innovation and the issues he is focusing on over the next five years, despite uncertainty on Capitol Hill.

Question: What prompted the decision to rebrand Ascension’s healthcare facilities? What effect has the rebranding had within the organization and outside in the communities it serves since being implemented in 2016?

Dr. Anthony Tersigni: In 1999 we decided not to brand Ascension because the brand equity was in the local entities. But since then, we believe we’ve made enough inroads in safety, quality and high-reliability that we felt Ascension has developed a reputation of its own. How do we combine the national reputation with the local reputation? Since co-branding the Ascension name with the names of our hospitals in our communities in advertising and on the web, the results have been outstanding. It’s about making it easier for the people we serve to navigate our system within a particular community because they now understand we’re all connected. We’re going to roll this out throughout the country, but we’re doing it in a sequential way because it’s very costly. But we believe now is the time to position ourselves as the national system that we are.

Q: What are your primary goals for the organization for the next five years?

AT: We want to continue to grow our primary care, expand access and continue to move toward value-based care. We want to be able to take on risk in a way where we can move into first-dollar coverage so we can move the patient through the continuum of care. We promise healthcare that works, that is safe and that leaves no one behind — for life. For us to do that, we need to be able to put patients in the right setting for the right care at the right time. If we can take on risk and walk with our patients and their families through our clinically integrated systems of care, we believe we can keep them well.

When it comes to population health management, the mindset is we need to change the way we look at our current business. We are moving from fee-for-service, where we get paid for doing things, to fee-for-value, or how to keep people well. We’ve been so successful as a hospital company under fee-for-service, and now we have to change the mindset and culture of all of these stakeholders. We have to go in a different direction. It’s like changing a flat tire on a car while it’s moving. No one has figured out yet how to do it, but you’re going to have to figure it out.

Another priority is mental and behavioral health. That’s very important to us. It’s a core part of our mission, and we want to be partners with whoever else sees that as a key component.

Q: What are the most important management practices when leading such a vast system with thousands of employees?

AT: In the 18 years since we created Ascension, we’ve been trying to have a culture that’s transparent, candid and nonpunitive. That’s a dramatic departure from the healthcare industry of old. I like to think I surround myself with really bright individuals and subject matter experts, and I try to empower everyone to do what’s in the best interest of those we serve. That’s what this is really all about. I like to think I hire people who are brighter than I am and give them the resources to do their jobs. Then I get out of the way.

That’s one of the principles we try to instill in our Leadership Academy — a program where we take high-potential employees for two to three years and help them develop. They focus on spiritual health to better understand their inner self. The second thing is leadership development. Everyone comes to us with certain gifts. We want them to hone those gifts and develop other skills. And the other piece, which people don’t talk about often, is personal health and vitality management. We expect our executives to work eight, 10 or 12 hours per day at optimal performance level. That’s virtually impossible unless you understand the physiology of your body.

Q: How would people describe you personally as a boss?

AT: My job is to allow leaders across the country to do what they are capable of doing. I like to think I am the supporting cast to what they do, and therefore I want to give them as much leeway and support as possible, and I want them to take risks. I am a risk-taker. As long as you don’t hurt people, that’s how we learn — through making mistakes. So take that risk.

Q: How do you plan for the future amid the current uncertainty surrounding healthcare policy?

AT: We need to be the highest-quality, lowest-cost, best-outcome provider in every market that we’re in. Then regardless of what happens in Washington D.C., we are going to be there for our patients and they’re going to want to seek us out.

We are working to do our part to reduce costs and cut waste in healthcare. But at the other end of what we do are human beings whose lives can either be helped or ruined by our actions or inactions. We are constantly advocating as a voice for the voiceless because many of those folks don’t get a chance to have this kind of conversation. I feel compelled to represent them because we are at ground zero in terms of healthcare. We see the pain and suffering that’s happening in society. They are in our clinics; they’re in our emergency rooms; they’re in our hospitals; they’re in our nursing homes.

I spent a couple weeks on Capitol Hill meeting with every senator I could meet and say, “Look, we want to be a resource. If you have a policy idea, let us know what that is and we will tell you the practical implications of that policy on the people we serve.”

We will continue to advocate for the poor and vulnerable. Last year we provided $1.8 billion of community care, community benefit and charity care. Given where this is going, I believe that number is going to go up next year. Because we are a faith-based, Catholic organization, we are going to continue to serve those people. If it ends up being over $2 billion, we’re going to figure out a way to serve them. We have to do so until we find a national solution here.

Optum CEO Amir Rubin departs for top spot at concierge medicine firm One Medical

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Amir Rubin, executive vice president and CEO of UnitedHealth’s Optum division, is leaving to take on the CEO role at One Medical, according to a CNBC report.

One Medical is a concierge primary care group with 60 locations across the country. It also offers a virtual medical team and mobile applications. Members pay an annual fee and can get access to same-day appointments, scheduled electronically.

Companies can also offer One Medical’s services as a benefit. The group has gained more than $180 million in investor funding since its inception a decade ago, according to the report.

Mr. Rubin led Optum since January 2016, prior to which he served as president and CEO of Palo Alto, Calif.-based Stanford Health Care. His previous leadership roles include serving as COO for the UCLA Health System in Los Angeles and COO at Stony Brook University Hospital in New York City.

Mr. Rubin succeeds One Medical founder Tom X. Lee, who will stay on as executive chairman of the group.

CEOs of Ascension, Dignity, Trinity, Providence, CHI to Trump, Congress: Work with us on healthcare legislation

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The leaders of five major nonprofit health systems are calling on Congress to work with them and draft healthcare legislation that encourages improved quality of care and ensures Americans maintain their insurance coverage, according to an op-ed penned in The Hill.

Anthony Tersigni, EdD, president and CEO of St. Louis-based Ascension, Kevin Lofton, CEO of Englewood, Co.-based Catholic Health Initiatives, Lloyd Dean, CEO of San Francisco-based Dignity Health, Richard Gilfillan, MD, CEO of Livonia, Mich.-based Trinity Health, and Rodney Hochman, MD, CEO and president of Renton, Wash.-based Providence St. Joseph Health all emphasized the need for Congress not to pass the Better Care Reconciliation Act as it is written and risk millions of Americans losing their health insurance.

“Together, we can fix this,” the CEOs wrote. “There is still plenty of room for improvement in our healthcare system. Healthcare is too expensive, coverage must be more affordable, Medicaid programs must become more innovative and efficient, the individual market must be stabilized and more payments for healthcare services must be made through value-based contracts.”

“…we invite the Trump administration and members of Congress to work together with us to create a health system that always puts people first and never forgets that each of us is only one disease or one accident away from vulnerability, ” wrote the group.

The CEOs’ organizations combined have a presence across 40 states and Washington, D.C.

Nash UNC Health Care board fires CEO

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Nash UNC Health Care’s long-serving top executive has been removed weeks after a blistering patient safety report and the continued slow bleed of hospital profits.

Larry Chewning, the hospital’s president and CEO since 2007, was told to step down by the Nash UNC Health Care Board of Commissioners, the 14-member volunteer board charged by the county with oversight of the hospital. The board reached the decision during a meeting Thursday. Chewning is set to announce his retirement later this week.

Chewning was on UNC Health Care’s payroll. The Telegram has requested, but not received, the details of Chewning’s employment contract including his severance package from UNC Rex Healthcare. Chewning didn’t return messages Monday.

Hospital Board Chairman Jim Lilley said he is putting plans together to hire a replacement.

“We’re just starting to have that conversation,” Lilley said. “We will have a full blown search with UNC’s help. We’ve got good folks in place and are taking steps forward.”

Lilley didn’t comment on why Chewning was asked to leave.

Under Chewning’s leadership, the hospital joined the UNC Health System and added several special facilities including a new emergency department, women’s health, heart and cancer centers. The hospital also lost millions of dollars — $10 million in just nine months late last year and earlier this year — over the past decade. The hospital recently received poor ratings on its overall ability to keep patients safe from preventable harm and medical errors in a report from the Leapfrog Group, a national nonprofit organization.

Prior to taking over at Nash, Chewning was CEO of Sampson Regional Medical Center in Clinton. He has a doctorate from the University of Alabama, a master’s degree from Duke University and a bachelor’s degree from Wake Forest. He is also a former lieutenant commander in the U.S. Navy.

It wasn’t immediately clear how Chewning’s job loss would affect his various board positions. He is chairman of the Southern Atlantic Healthcare Alliance and a member of the board of directors of Carolinas Gateway Partnership and the Strategic Twin Counties Education Partnership.

Chewning was only the third CEO of the hospital since it opened nearly 50 years ago. He replaced Rick Toomey who left for a hospital in South Carolina. Toomey replaced long-time CEO Bryant Aldridge.

Charles Stokes named CEO of Memorial Hermann Health System

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Promoted from interim to permanent job following June shake-up,

Charles “Chuck” Stokes has been appointed president and CEO of the Memorial Hermann Health System, two weeks after he was promoted to the interim job following an abrupt shake-up atop the largest hospital network in the Houston area.

Stokes, who began his career as a registered nurse and and joined Memorial Hermann as its chief operating officer in 2008, succeeds Dr. Benjamin Chu, a highly touted executive who departed June 19 after just a year as CEO. Dan Wolterman, Chu’s predecessor, held the job 14 years.

“At a time when our industry is facing unprecedented challenges with declining reimbursements and escalating costs, I have every confidence Chuck has the experience and visionary leadership necessary to navigate our organization through this period of change and uncertainty,” Memorial Hermann Board Chair Deborah M. Cannon said in a statement.

Stokes, 63, said in a statement that he is “honored and humbled” by the appointment.

Virtua names new CEO

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Virtua named Dennis W. Pullin, an executive at MedStar Health in Baltimore, to succeed Richard P. Miller as president and chief executive of South Jersey’s largest health system.

At MedStar, Pullin, 57, was president of MedStar Harbor Hospital in Baltimore and a MedStar senior vice president responsible for pharmacy, imaging, lab and pathology, behavioral health services, and transportation, Virtua said.

MedStar is a not-for-profit system of 10 hospitals in Maryland and Washington. It employs 30,000 and $5.3 billion in operating revenue in the fiscal year ended June 30, 2016. Virtua had $1.3 billion in revenue last year.

Miller, 64, has been president and CEO of Virtua since its formation in 1997 through the merger of West Jersey Health System and Memorial Health Alliance. In January, Miller announced his intention to retire this year.

Pullin will take over at Virtua this fall, after a period of working with Miller.