Hospitals: Give us more money to help the poor.
State: Your executive pay is up 95 percent in five years.
Hospitals: What’s your point?
They Say Treating Poor Too Costly But Double Executive Pay
At the same time, the amount those hospitals paid their top executives has skyrocketed, nearly doubling — with a few salaries even topping the $1 million mark.
Salaries paid to top hospital executives grew an estimated 95 percent from 2002-2006, according to a task force Gov. M. Jodi Rell convened to examine the financial health of the state’s hospital system.
But the task force also says the hospitals will continue to falter financially if the state does not pay them more to treat low-income patients covered by state health insurance programs, including Medicaid.
Christine Vogel, commissioner of the state Office of Health Care Access and a chairwoman of the hospital task force, acknowledged that the 95 percent increase in executive salaries noted in the task force’s report may not be a precise figure because of limitations in the data collected from the hospitals.
In addition to higher pay for individual executives, the increases may reflect the fact that over the last five years some hospitals upgraded their top post from an administrator to a CEO; other hospitals merged or expanded, creating more responsibilities for the top executive; and some hospitals added administrators.
Those limitations aside, Vogel said, the numbers offer a glimpse of how the hospitals operate.
Hartford Hospital President and CEO John Meehan, who plans to retire this year, made slightly more than $1 million in 2006, up 27 percent from the $811,802 he made in 2002, for example.
Hospital spokeswoman Lee Monroe said that figure compensates Meehan for two positions, one as head of Hartford Hospital and one as head of Hartford Healthcare Corp., where he oversees the running of MidState Medical Center, Clinical Lab Partners, VNA Healthcare, Eastern Rehab Network and other organizations.
At Yale-New Haven Hospital, three top managers make more than $1 million, including President and Chief Executive Officer Marna Borgstrom, who made $1.1 million in 2006.
Another top-paid hospital executive is Robert Kiely, chief executive officer of Middlesex Hospital in Middletown. Kiely’s salary jumped by 82 percent, from $511,220 in 2002 to $932,923 in 2006.
At a time when most of the state’s hospitals are barely breaking even and some are losing money, Vogel said, generous executive salaries should at least be considered when looking at hospital costs. The task force also found that hospital costs for fringe benefits paid to executives ballooned by more than 200 percent from 2002 to 2006.
“If they have enough money to increase salaries by that amount, what kind of fiscal problems are they really in?” asked state Sen. Toni N. Harp, D-New Haven, a chairwoman of the legislature’s appropriations committee, which controls state spending.
Stephen Frayne, senior vice president of the Connecticut Hospital Association, a trade group that represents the hospitals, said executive salaries are driven by competition for high-quality administrators.
“The point that executive salaries have gone up and gone up significantly is an accurate statement,” Frayne said. “That is the same outside health care. The competition for premium talent is expensive.”
Complaining that the state’s Medicaid rates have undermined their financial stability, hospital executives have spent at least the last decade pressing lawmakers to put more money for hospitals in the state budget.
For every dollar they spend treating patients covered by the state’s HUSKY Medicaid program for low-income families and other programs for single adults, the hospitals collect only 70 cents from the state. Combined, the hospitals say, they lose $250 million a year caring for low-income residents.
This fiscal year, the General Assembly answered the plea by increasing Medicaid rates to hospitals by $46 million and promising a total of $76 million more in reimbursement by the summer of 2009.
Also this month, the state awarded $20 million to eight needy hospitals to allow them to pay debts, buy a new scanner, repair a roof, improve a neonatal intensive care unit and complete other special projects that they could not otherwise afford.
Hospital officials say they are grateful. But they say they still need more.
“We’re going to continue to focus on the fact that the single largest problem that hospitals are having to make ends meet is caring for folks in the Medicaid population,” Frayne said.
Because the state is at the midpoint of its two-year budget cycle, and because Rell has already called for frugal spending in the face of an impending national recession, Frayne said, the hospitals may have to wait at least another year for more state money.
But that’s not going to stop them from asking, he said.
They may come asking, Harp said. But the magnitude of their executive salary increases is not going to strengthen their case. “There is no symbolism that leads me to feel they have that big a problem when they’re taking that much money out of the system,” Harp said.
At Bridgeport Hospital, for example, the president and chief executive officer’s salary has jumped from $244, 524 in 2002 to $725,480, an increase of 200 percent. During that period, the hospital scraped by with a slim operating profit margin of just over 2 percent.
Robert Trefry, CEO of Bridgeport Hospital since 1995, said executive salaries are generally set by hospital boards of directors, who often bring in independent consultants to set the pay level. He said with the demands of running a hospital and national competition for top level administrators, generous pay and benefit packages are needed to recruit the best leaders.
Trefry and Frayne, of the hospital association, also pointed to figures in the new task force report suggesting that high administrative costs are not contributing significantly to climbing hospital costs.
The cost of providing hospital care in Connecticut rose by one-third, from $4.9 billion in 2002 to $6.5 billion in 2006. But increases in executive salary and benefits accounted for only 1 percent of that inflation.
“It is not an issue that is driving health care costs,” Trefry said.
Contact Hilary Waldman at firstname.lastname@example.org.