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The Keckley Report

The North Carolina Study of Hospital CEO Pay: An Incomplete Picture

By February 20, 2023March 1st, 2023No Comments

Last Wednesday, North Carolina Treasurer Dale Folwell released a report alleging 9 prominent North Carolina health systems overpaid their CEOs more than $1.75 billion from 2010 to 2021. Report excerpts:

“When North Carolina hospitals paid $1.75 billion to their top executives, chief executive officers (CEO) captured almost 20% of that pay from 2010 to 2021. Researchers also found troubling trends in hospital executive compensation during the pandemic. Frontline workers gained national recognition for their work caring for patients, but nurse and physician wages have risen far more slowly than executive pay over the past decade. Despite pleading poverty and taking $1.5 billion in taxpayer-funded COVID relief, the majority of hospital top executives did not cut their own paychecks in 2020…

According to peer-reviewed reports commissioned by the Treasurer, nonprofit hospitals enjoyed more than $1.8 billion in tax breaks in 2020, but the majority of hospitals failed to justify their tax breaks by providing an equivalent level of charity care. …”

In an accompanying news release, Folwell observed “This is the biggest transfer of wealth in our generation, and it’s being financed disproportionately on the backs of sick, low- and fixed-income people. Nonprofit hospital executives have lost their mission. They are supposed to make people better, not make themselves richer.. Executives enriched themselves while fueling a crisis of healthcare affordability in North Carolina… The pandemic did not interfere with pay raises for most nonprofit hospital system executives in 2020.   Average CEO compensation was $3.4 million in 2020 across the largest nonprofit hospital systems in North Carolina. Together, the top 40 hospital executives collected a total of $77.2 million in 2020 — enough to pay the average salaries of 1,412 teachers in North Carolina…

Out of 175 executives across eight systems, only 35 executives took pay reductions in 2020 that were not triggered by departures.  Only Duke, Novant and Cone Health cut their CEO compensation, by 2%, 1.7% and 6.5%, respectively, in 2020 — and all earned higher wages by 2021, except for the CEO of Duke Health.”

My take:

Setting aside presumptions about the politics of healthcare in North Carolina, this report will get attention. Notably, a closer look reveals that long-term, performance-based compensation represents 70% of the CEO packages and short-term packages (approx. $3 million) up to 10-times packages for the state’s smallest hospital CEOs. But for the average worker, both are’ too much’ just as most think big corporations pay their exec’s too much. Nonetheless, it’s a wake-up call for hospitals:

1-Executive compensation in hospitals is getting increased attention. It’s part of an orchestrated criticism of hospital affordability, pricing and lack of transparency led by detractors—insurers, unions, political special interests and others. Whether accurate or not, fair or misleading, pay packages get attention in every industry. Complicating matters, a necessary understanding of the complexity of hospital operations and competitive forces in the sector among employers, elected officials, and even hospital boards is low.

2-Optics matter. Pay equity and Exec Comp are issues that influence public opinion and create discord in workplaces—especially hospitals. Compensation packages for hospital CEOs are fodder for misleading headlines and especially tough for smaller, independent and rural hospital board compensation committees that must compete for talent in a sellers’ market.

Critics of hospitals are vocal and many are well-funded. Some of their complaints are valid; some not. Perceptions about a CEO’s compensation requires proactive attention: in some circles, hospitals are viewed as public utilities rather than complicated businesses and CEO compensation is a key element. Thus, more attention must be given to…

1-Compensation committee performance: Studies show Comp Committees depend on outside consultant recommendations for their C suite pay-packages, but preparedness by committee members is sometimes inadequate. Talent acquisition, succession planning and compensation for CEOs is the most important decision made by hospital boards. But matching CEO compensation to long-term (8-10 years) plans is not considered as heavily as necessary. How a hospital navigates clinical innovations, capital market dynamics and competition in the future is not an incremental shift from the past. It requires critical experience beyond an acute orientation and exceptional leadership skill. Comp committees must bring a long-term perspective to their task of setting Exec Comp including the CEO.

2-Long-term vision and strategy for the organization: Hospitals are labor intense, capital-intense and highly regulated. Most hospital boards follow guidance from the CEO about the future, but no one knows for sure what that is beyond 2025 due to market shifts and potential Black Swan events. The primary fiduciary responsibility of a hospital board is to set direction for its future and secure talent to pursue that plan. It’s more than an occasional retreat: it requires active, comprehensive market surveillance, a prepared board and leadership by the CEO.

There are more than 130 hospitals in North Carolina whose base compensation range from $150,000 to a handful who make low 7-figure take home pay. I reviewed national and NC CEO comp studies in evaluating the report from the State Treasurer. Though the CEO basic comp packages is much higher than the median for the state’s smaller hospitals, they’re nonetheless below peer-sized organizations in the S&P 500.

The issue of CEO compensation is tricky for hospitals because the public’s unaware of how hospitals operate—7/24 serving all comers. In North Carolina, hospitals directly impact 8% of the state’s economy. Understandably, they pay attention to Exec Comp! The Treasurers Report should prompt discussion about the role of hospitals in the state and their future. It’s an incomplete picture.




HOSPITAL EXECUTIVE COMPENSATION A Decade of Growing Wage Inequity Across Nonprofit Hospitals
Rice University’s Baker School for Public Policy, North Carolina State Health Plan for Teachers and State Employees, Johns Hopkins University of Bloomberg School of Public Health

Groundbreaking Report Concludes Nonprofit Hospitals Paid Top Executives Over $1.75 Billion in the Past Decade, Doubling CEO Compensation Faster than Previously Thought Office of the Treasurer State of North Carolina February 15, 2023

Sullivan Cotter Health Care Executive Talent Movement February 2019


Re: hospital staffing: “Mandated staffing levels is a 20th-century solution for a 21st-century problem,,, Human-machine collaboration has the power to transform healthcare delivery the old-fashioned way – by optimizing human potential. No other business strategy has a higher return on investment.”

David Johnson The Way Healthcare’s Working Isn’t Working (Part 2): Changing Mechanics 4Sight Health February 16, 2023 /


Re Hospital consolidation: “Health care antitrust policy should be driven not by a generic aversion to concentration but by a careful understanding of how health care markets can work in this new digital era. The more policymakers know about where the market can go, the more effective and transformative antitrust policy will be.

Health care antitrust must be about more than combatting traditional mergers and instead should commit itself to nurturing a dynamic market, one that encourages entry, creativity, and innovation. The lessons of the Microsoft case tell us that if we can stop the monopolists from halting innovation, we will soon be able to usher in a new market paradigm, one that promises to increase competition and — finally — slow our spiraling health care costs.”

Barak Richman Opinion | Hospitals Are a Problem. Competition Is the Answer. Politico  January 19, 2023

Bernie Sanders Chair of the Senate HELP Committee on health system greed: “…we have to pick on the incredible greed of the pharmaceutical industry, who make huge profits every year and pay their C.E.O.s huge salaries and compensation packages…That’s something we are going to go into big time…The primary health-care system is even more broken than the general health-care system.. You have tens and tens of millions of people who, even if they have insurance, can’t find a doctor. Hospitals are shutting down. We don’t have enough doctors. We don’t have enough nurses. We don’t have enough dentists or mental-health providers.”

“John Cassidy Bernie Sanders’s New Campaign: Taking on Big Pharma and Starbucks the New Yorker February 14, 2023

Re: FTC role in oversight of antitrust, consolidation activity (of special significance in healthcare): “Much ink has been spilled about Lina Khan’s attempts to remake federal antitrust law as chairman of the Federal Trade Commission. Less has been said about her disregard for the rule of law and due process and the way senior FTC officials enable her…I am not alone in harboring concerns about the honesty and integrity of Ms. Khan and her senior FTC leadership…My fundamental concern with her leadership of the commission pertains to her willful disregard of congressionally imposed limits on agency jurisdiction, her defiance of legal precedent, and her abuse of power to achieve desired outcomes…Abuse of regulatory authority now substitutes for unfulfilled legislative desires…Although serving as an FTC commissioner has been the highest honor of my professional career, I must follow my own advice and resign in the face of continuing lawlessness. Consider this my noisy exit.”

WSJOp Ed “Why I’m Resigning as an FTC Commissioner: Lina Khan’s disregard for the rule of law and due process make it impossible for me to continue serving. “Christine Wilson Wall Street Journal February 13, 2023


Executive Compensation

Re: exec comp: “There is much press on CEO compensation in health care these days. There tends to be strong governance for ensuring reasonable compensation for CEOs of these mission-driven health systems. High-performing talent is sought after, and when new CEO positions are opening, recruiting on the market, it causes leadership continuity risk. Boards are doing their jobs to retain talent, and these CEOs often run the largest employers in many states.”

Kathryn E. Hastings, Managing Director and Executive Workforce Practice Leader  SullivanCotter

CEO pay up 1,322% since 1978: “CEOs were paid 351 times as much as a typical worker in 2020. Average top CEO compensation was $13.9 million in 2020, slightly below its level in 2019. In 2020, the ratio of CEO-to-typical-worker compensation was 351-to-1 under the realized measure of CEO pay; that is up from 307-to-1 in 2019 and a big increase from 21-to-1 in 1965 and 61-to-1 in 1989. From 1978 to 2020, CEO pay based on realized compensation grew by 1,322%, far outstripping S&P stock market growth (817%) and top 0.1% earnings growth (which was 341% between 1978 and 2019, the latest data available). In contrast, compensation of the typical worker grew by just 18.0% from 1978 to 2020.”

CEO pay has skyrocketed 1,322% since 1978 Economic Policy Institute August 10, 2021

AFL-CIO Executive Paywatch: Key findings of latest report “Greedflation” with results for 2021:

  • CEOs of S&P 500 saw pay increases of 18.3% while their corporate profits increased 17.6%.
  • S&P CEOs earned an average of $18.3 million–+ $2.8 million over 2020. Salary + bonus is $1.52M (8.3%) and non-equity incentives are $3.2 million (17.5%).
  • While inflation increased 7.1%, nominal worker wages were up 4.7% but real worker wages were down 2.4%
  • CEO pay to median worker wage ratio: 324:1.

Executive Paywatch | AFL-CIO (


Senator requests exec comp, community benefit information from Ascension : U.S. Sen. Tammy Baldwin (D-WI) wants Ascension CEO Joseph Impicciche to detail “Ascension’s questionable priorities that appear to go against its non-profit mission.”

“In fact, I am concerned that the opposite is occurring—that by operating like a private equity fund, Ascension is squeezing staff, closing facilities, and extracting cash from its member hospitals for dubious ‘management fees’ all to advance its investment activities and provide compensation to its executives.”

Baldwin also raises questions about Ascension Capital, which the health system calls a “strategic investment initiative, generating capital gains that can be re-invested to support Ascension’s Mission to care for those who are poor and vulnerable.”

On her list of 8 information requests, Baldwin wants :”A description of the compensation packages, including all equity, stock options, restricted stock units, or performance-related metrics for Ascension executives, and provide detailed compensation descriptions for any board activity attributed to roles on Ascension affiliated organizations for Anthony Speranzo, CEO of Ascension Capital and Anthony Tersigni, Chairman of the Board, Ascension Capital.”

John Commins “Non-profit Ascension CEO Pressed to Detail For-profit Investments, Community Benefit” February 13, 2023


Lown Institute: Non-profit hospital CEO comp above other NFP sectors: Per the Lown Institute analysis: “in the world of nonprofit pay scales for executives, hospitals are outliers. A 2021 report from the Economic Research Institute (ERI) found that the average annual CEO pay in most nonprofit industries was between $100,000 and $200,000 in 2018. The two exceptions were university CEOs, who were paid an average of $350,000, and hospital CEOs, who were paid on average $600,000. The previous year, the top 10 highest paid nonprofit health system executives each made $7 million or more. Even the bottom 25% of nonprofit hospital CEOs enjoyed annual compensation of about $185,000—more than the highest-paid quartile for CEOs in nonprofit arts and culture, environmental, human services, and religion-related organizations….Within this set of more than 1,000 nonprofit hospitals, we found that hospital executives on average made 8 times the wages of workers without advanced degrees in 2018. However, this ratio varied widely. Some hospital CEOs were paid at twice the rate of other workers, while the highest paid received 60 times the hourly pay of general workers.

According to the Economic Policy Institute, average realized compensation of US CEOs, adjusted for inflation, grew by 105.0 % from 2009 to 2019, while typical worker compensation increased by just 7.6 %. Similarly, from 2005 to 2015, the average compensation of major nonprofit hospital CEOs rose by 93 % from $1.6 million to $3.1 million, while average hospital worker wages increased by a mere 8% in that decade.”

Lown Institute January 6, 2023

Say on Pay update: On August 25, 2022, the SEC adopted final rules requiring public companies to disclose the relationship between the executive compensation actually paid to the company’s named executive officers (NEOs) and the company’s financial performance. The final rules implement the “Pay Versus Performance” disclosure requirements mandated by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act enacted in 2010 (Dodd-Frank Act). Results:

  • 96.5% and 97.2% of Russell 3000 companies in 2022 and 2021, respectively, received at least majority support on their say-on-pay votes, with approximately 93% receiving above 70% support in 2021 and 90% receiving above 70% support in 2022. This demonstrates slightly reduced say-on-pay support in 2022 compared with 2021.
  • 39% of S&P 500 companies and 32% of Russell 3000 companies surveyed have received less than 70% support in a say-on-pay vote at least once since 2011.

Following the onset of the COVID-19 pandemic, several companies adjusted their executive pay packages to ease the burden of the pandemic on employees. For example, many CEOs saw salary cuts, adjustments to bonus payouts, changes in long-term incentive plans (LTIPs) and more. Ultimately, many companies restored those adjustments, but median CEO pay declined from $12.2 million in 2019 to $12 million in 2020.

Two years after the start of the pandemic, the early data shows that CEO pay is back on the rise. In 2021, median total direct compensation for companies included in the analysis increased to $14.3 million. This change from $12 million in 2020 would represent a near 20% increase, should the trend persist. Over the last two years, many companies elected to award their CEOs for staying on board and guiding their organizations through turbulent times, likely contributing to the increase in pay.

Proxy Season 2022: Early Trends in Executive Compensation

Harvard Law School Forum on Corporate Governance March 29, 2022

Study: healthcare experience on boards of leading hospitals: In July, researchers analyzed board composition and experience for the 20 top-rated hospitals by US News & World Report in 2022, which are all nonprofit academic medical centers in urban areas. Findings:

Among the 529 board members, 44% had a background in finance (i.e., private equity funds, wealth management firms, or multinational banks). real estate (14.7%), healthcare providers (14.6%), professional services (12.6%) and insurance (5.2%). Provider trustees are primarily physicians (94%) or nurses (6%).

Gondi et al Professional Backgrounds of Board Members at Top-Ranked US Hospitals Journal of General Internal Medicine February 8, 2023

State legislators considering price caps: Per Blomberg Law, state legislators in IN, CT, MN, WA, CO, MT and NV are considering limits on hospital charges ( IN, 260% of Medicare vs. 246% national). Other areas of focus: use of reference pricing (MT, OR, MN, NJ) and employer health plans are pushing to control the costs. In addition to rate caps, some states are also pursuing measures such as limiting potentially anticompetitive clauses in contracts between health insurers and hospitals.

Hospital Price Caps Among State Ideas to Lower Health-Care Costs Deep Dive Feb. 17, 2023,

Indiana weighing bill to link fees to Medicare rates

Majority think CEO Comp should not  be tied to organization size:

  • 86% of respondents believe the CEOs of large, public U.S. companies are overpaid; only 14 % do not.
  • A majority believe the CEO of a large company ($25 billion+) should be paid only 50% more than the CEO of a smaller company despite a 1,000-fold difference in revenue between the companies. Only 4% of Americans believe the CEO of the larger company should receive 10 or more times the compensation of the CEO of the smaller company.
  • Total compensation among S&P 500 companies is $12 million, while median total compensation among Russell 3000 companies is a much lower $4.1 million. Within the Russell 3000, company market capitalization at the 90th percentile is $23.6 billion and CEO pay is $13.3 million; at the 10th percentile, those figures are $945 million and $1.0 million, respectively. That is, as company size increases 25-fold, pay increases 13-fold.

Pay for Performance… But Not Too Much Pay: The American Public’s View of CEO Pay

Rock Center for Corporate Governance at Stanford University Closer Look Series: Topics, Issues and Controversies in Corporate Governance No. CGRP-80, 2019

2 Dec 2019

Not-for-profit hospital CEO comp: “The CEOs that run these tax-exempt hospitals are among the highest paid nonprofit executives in the United States. The average nonprofit hospital CEO makes $660,000 in total compensation (base salary, bonus, and benefits) per year. Most of these CEOs make between $214,429 and $834,631 per year, with top 5% of nonprofit hospital CEOs making more than $2,000,482 per year.”

Meager Rewards for Workers, Exceptionally Rich Pay for C.E.O.s June 11, 2023

Study: Surgical procedures costs higher at in-network hospitals: Researchers in the JAMA Network Open study analyzed 3,195 hospitals’ negotiated prices through the Turquoise Health Database. Findings:

  • For 15 of the 16 surgical procedures hospitals are required to post, median negotiated prices were significantly higher at hospitals within networks than at independent hospitals.
  • The median price for a shoulder arthroscopy was $4,432 at hospitals within a network, compared to $2,643 at independent hospitals.
  • Procedures also had major variations in negotiated prices across facilities: at hospitals within a network, the median price for a knee cartilage removal procedure was $1,446 higher than at independent hospitals. And the median price for a prostatectomy at facilities in hospital networks was $966 more than at independent hospitals.

Mullens et al Evaluation of Prices for Surgical Procedures Within and Outside Hospital Networks in the USJAMA Network Open. 2023;6(2):e2255849. doi:10.1001/jamanetworkopen.2022.55849

CMS Report: hospital price transparency compliance: In a blog published in Health Affairs, leaders from CMS released updated findings on hospital compliance with the Hospital Price Transparency Rule that requires hospitals to post prices for 300 “shoppable services” in a machine-readable file. “Through reviews of 600 hospital websites in 2022, CMS has found that 70% of hospitals are in compliance with both parts of the rule, up from 27% in 2021. However, 82% of hospitals are in compliance with at least one component of the rule.” They note their findings are in line with some third-party and state reports but “divergent from others.” CMS indicates that the agency will be increasing oversight and enforcement, as well as considering further changes in policy to increase hospital compliance and ease of use of this information

Hospital Price Transparency: Progress And Commitment To Achieving Its Potential Health Affairs February 14, 2023 /


Pitchbook: Innovation capital centered on coasts: Since the beginning of 2019, the Bay Area and New York City have raised $330.8billion in commitments for VC funds, while the rest of the US has raised just 45.6% of that total. The concentration of capital within investors headquartered in these markets looks problematic for the industry, as it could lead to further concentration of ideas and technologies in these ecosystems

Capital Concentration and Its Effect on the VC Ecosystem Pitchbook February 16, 2023 www. /


BLS: CPI down slightly: Consumer prices in January increased 6.4% compared to January of last year, down from 6.5% in December and a peak of 9.1% last June. Still, the newest inflation number remains far above the Federal Reserve’s stated target of 2%and consumer prices increased 0.5% from December to January, much higher than the 0.1 percent rise from November to December

Bureau of Labor Statistics February 14, 2023

Public Health

Study: gas stove smoke accounts for 12.7% of childhood asthma: At the state level, Illinois experienced the highest burden (21.1%), followed by California (20.1%), New York (18.8%), Massachusetts (15.4%), and Pennsylvania (13.5%). Texas, Colorado, and Ohio experienced about a 10% burden. In contrast, Florida experienced the lowest burden (3%).

“Despite a growing gas stove public health concern, this study suggests that gas stove smoke makes up a small percentage of asthma cases in children, and interventions to curb these cases should be considered as part of a much larger asthma prevention strategy.”

Gruenwald T, Seals BA, Knobbs LD, Hosgood HD. Population attributable fraction of gas stoves and childhood asthma in the United States. Int J Environ Res Public Health. 2022;20(1):75. doi:10.3390/ijerph20010075


Transparency, Nursing Homes, Clinical Research

CMS proposed rule requires ownership disclosure for nursing homes: A new Centers for Medicare and Medicaid Services rule would require nursing homes to disclose more details about their ownership, including whether private equity or real estate investment trusts have a stake in the facilities or companies providing services onsite. Biden administration health officials on Monday cited research showing residents in nursing homes acquired by private equity were 11.1% more likely to have a preventable emergency department visit and 8.7% more likely to experience a preventable hospitalization.

Disclosures of Ownership and Additional Disclosable Parties Information for Skilled Nursing Facilities and Nursing Facilities — Proposed Rule CMS February 13, 2023

GAO report: private equity ownership of IRB might shortcut quality controls: More than half of the approximately 2300 institutional review boards identified are affiliated with universities, and one-quarter are affiliated with hospitals or health care organizations. A small number are independent, or unaffiliated with any institution. They represent just 2% of all boards, but now account for the largest share of the research reviewed — rising to 48% in 2021, from 25% in 2012.

The number of independent boards dropped largely due to consolidation fueled by investments by private equity firms, which have gobbled up several independent boards over the past several years. The trend prompted discussion that interest in profits could outweigh patient safety.

In its report, in fact, the GAO cited concerns that independent boards backed by private equity firms are “beholden to their clients or equity holders.” Three experts the GAO interviewed noted for-profit independent boards, in particular, “may be more inclined to approve a protocol and do so expediently in order to satisfy a client.”

Ed Silverman Government watchdog calls for stronger oversight of for-profit research review boards February 17, 2023