If you are wondering why health care costs are high, look to CEO pay

I recently wrote a post about an uninsured friend’s trip to Miami Valley Hospital for three stitches from a clean cut.

The total for 3 stitches: $1423.38 or $474.46 per stitch.

This is criminal- as is what the CEO of a “nonprofit” hospital is paid. The Dayton Daily News did a little real reporting today and pointed out that the CEO’s are making millions, while the hospitals are granted tax free status.

I understand executive compensation, but considering that more than half of all Americans can’t afford health care, while these primadonna CEO’s are getting paid huge sums with zero personal risk has to stop. NO.

Some excerpts from each of the three articles:

While overall pay in the region rose 13 percent from 2002 to 2007, hospital CEO total compensation jumped an average of 59 percent, according to a Dayton Daily News analysis.

Tom Breitenbach, chief executive of MedAmerica Health Systems Corp. and Premier Health Partners, led the way. After exercising benefit cashout options of $3 million in 2007, Breitenbach made $4.1 million, or four times his 2002 earnings, according to IRS documents. During a six-year period from 2002 to 2007, his total compensation was more than $17 million, including $8.9 million from an executive investment plan, documents show.

Frank Perez, chief executive of Premier’s nearest competitor, Kettering Adventist Healthcare, was paid $1.3 million in cash compensation and $1.7 million in total compensation in 2007, or about double from 2002. From 2002 to 2007, his total compensation — including retirement benefits and expense accounts — was $7.9 million….

Hospital officials also say top pay is needed to attract and retain top candidates, including those who might go to work in the for-profit industry. But consumer advocates argue that nonprofit hospitals, which pay no taxes and receive most of their revenue from tax dollars, have a public duty to restrain executive salaries, especially when many patients and their families are struggling.

“We have consumers who are breaking under health care costs,” said Cathy Levine of the Universal Health Care Action Network of Ohio. “We can no longer support these skyrocketing CEO salaries.”

via Times are good for nonprofit hospital executives.

And while there are federal guidelines on the pay, they are so convoluted that they aren’t enforced or enforceable.

The report concluded that the reasonable compensation standards “have proved difficult for the IRS to administer (because of) imprecise legal standards (and) complex, varied and evolving fact patterns.”

The report added: “Amounts (of compensation) reported appear high but also appear supported under current law. For some, there may be a disconnect between what, as members of the public, they might consider reasonable, and what is permitted under the tax law.”

via Nonprofit hospitals face federal scrutiny about executives’ pay.

But the real shocker comes out in yet a third article- besides granting the hospital property tax exemptions, we contribute $5 million in tax dollars to these “nonprofit hospitals” as part of our Health and Human Services levy:

Consumer advocates say nonprofit hospitals have no business competing with for-profits because of their tax-exempt status, their ability to raise donations from the community and their revenues from tax-supported programs like Medicare and Medicaid, which account for more than half of the average hospital budget. In Montgomery County, hospitals receive a total of $5 million per year from the Human Services Levy for indigent care. (emphasis added)

“Whose money is this?” asked Cathy Levine of the Universal Health Care Action Network of Ohio, a Columbus-based grass-roots organization pushing for broader health care coverage. “The hospitals believe it’s theirs, and that they should be free to build multiple heart hospitals as revenue-generators and spend millions on CEO compensation packages rather than addressing the unmet needs of their communities. They’re crippling people with medical debt while bestowing obscene wealth on their nonprofit CEOs.”

If hospital boards of trustees won’t limit soaring CEO salaries, she said, it’s up to the state attorney general’s office or state or federal legislators to take action.

via Officials at nonprofit hospitals say experience, competition key to pay.

Since the hospitals also receive federal dollars in the form of medicare payments and grants for research and other services, taxpayers should be able to have some say on executive compensation. It’s time to impose new restrictions on salaries at all companies that receive tax dollars and breaks. If you want to be a robber baron, do it with your own money.

There has to be some risk taken to deserve such returns- and I’ve yet to see a CEO be held accountable. It’s time we got our money’s worth, and gouging for stitches has to stop.

Either that, or it’s time to pay taxes like everyone else.

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16 Responses

  1. Gene February 22, 2009 / 9:13 pm
    “Since the hospitals also receive federal dollars in the form of medicare payments …..”

    well, by that logic, tell the “bagger” at Kroger to take a $.40 pay cut bc they accept food stamps. Or the CEO of Kroger, better yet.

    They are over paid, big deal. We build stadiums and arenas and fill them with athletes who get paid ga-zillions and athletes don’t have to supervise or employee anyone, and most often their place of employment is paid by tax payers – kind of like your new Dayton Bombers Arena, ehhh?

    We overpay actors and musicians and etc………. but you never get on their case, and ALL professions to a certain degree rely on the government for something, especially if they are successful. Is this typical liberal babble?

  2. In the 'burg February 22, 2009 / 10:20 pm
    You should have seen the pre-emptive memo that came out late Friday in anticipation of the article– Uncle Frank was obviously sweating bullets and scrambling to deflect criticism.

    You would have thoroughly enjoyed it.

  3. David Lauri February 22, 2009 / 11:03 pm
    If $500,000 is now enough for CEOs of Wall Street firms, surely that’s plenty for CEOs of non-profit hospitals in the Miami Valley, especially given Dayton’s lower cost of living.

    I do think Gene’s right that accepting Medicare payments doesn’t quite put hospitals in the same situation as Wall Street firms receiving bailouts, but that they are non-profit well might. One could certainly make an argument that CEOs of non-profits should have their salaries capped.

    And what is it that these CEOs do that requires such fierce competition salary-wise in attracting people to be CEOs?

  4. Gene February 22, 2009 / 11:08 pm
    Limits can be bad.

    “Limit marriage to one man and one woman.”

    Be careful in the language we use. Be careful when YOUR government sets limits on you, what you can earn, who you can speak to, what religion you can practice, who you can kiss, etc………..

    Be very very very careful of Big Brother limiting you on your life.

  5. tg February 22, 2009 / 11:28 pm
    I wondered when someone would finally get around to bringing up the outrageous salaries being paid to athletes and entertainers. It was just a matter of time, and probably not a bad idea.

    Somewhere along the line I stumbled upon a website at http://www.warongreed.org and they’re doing their part to expose some of the Wall Street practices that, coupled with tax loopholes, make you stop and wonder why more Americans aren’t flooding their Representatives’ servers and switchboards and snailmail boxes demanding answers….or changes!

    Gene, it’s not “liberal babble” – it’s a reality check. Greed is the bottom line for much of the mess that our economy is in. The Economy doesn’t affect liberals OR conservatives, we’re all in this mess together.

  6. Gene February 22, 2009 / 11:38 pm
    The liberal babble I am pointing out is the bitching about the riches of the businessman, yet ignoring the riches of the arts or athletes or others who somehow serve a “better” purpose in the liberal view. Give me a break, Nel Carter.

    Greed exist in a lot of areas, David is not willing to point it out in the entertainment world.

    The one thing I hate most is when some punk ass actor rips into businesses people and all that MF ever did was cry on film and get paid a million bucks for average acting. Jack Black – again, Nel Carter, give me a break . He is terrible yet rich, but in the mind of David this is not outrageous.

    At least the CEO works his/her way to the top and gets the job when he/she is like 50 years old. The actor or athlete is paid millions on “potential” and if they fail they still get paid. A CEO (generally speaking) has worked 20 or 30 years before their big payday. Liberals always miss this somehow.

  7. David Esrati February 22, 2009 / 11:41 pm

    It’s the part about being a non-profit and exempt from paying property taxes that burns me- pay your taxes and don’t accept our tax dollars for a promise of “helping the helpless”- and then sending a bill for $1,400 stitches.
    It’s time we had a contract with corporations- who enjoy all kinds of “special privileges” when it comes to liability- with liability protection should come some sort of reliability convention- ie not to send jobs overseas, not to screw the shareholders (unless they really have a say) etc.
    The video over at http://warongreed.org/ that TG pointed out makes things very clear- using Burger King (owned in part by Goldman Sachs) as an example.

  8. Gene February 22, 2009 / 11:53 pm
    and no film company or sports franchise has ever taken advantage of tax laws and poor pay for lower skilled workers…………

    The point is Hollywood is guilty as sin regarding this, yet the boners liberals get off watching movies makes them blind to this fact. I think liberal need to grow up regarding this subject – People you know and support, industries you work in and support, are guilty of the same thing.

  9. Greg Hunter February 23, 2009 / 3:43 am
    Yes, This “non-profit” BS is nothing more than a loop hole to allow bloated management to rake it in and then contribute to candidates that ensure the levies or policies that suit there business interests. The DDN did the story because of declining revenue from Auto and Real Estate and if the Hospitals know what is good for them, pay the piper baby and they will shut there yap. I love it, the fall of the Roman Empire and I am blessed to see all of the rats scramble around the ship.

    Let’s Play the linking game, because despite what Geno says, the only voices with enough clout and heart to even give the any care to the other side of the story are actors and actresses. Come on Grinch absorb the Data, maybe your heart will grow 7X today!.

    As Ralph Nader says about the difference between Democrats and Republican “its only the speed at which they drop to their knees to fulfill corporate interests” Ha!

    Greater Dayton Hospital Association Board of Trustees – Find me a Liberal in that Bunch, but you will find many “Conservatives” who feed at the Government trough.

    KMC Employee Funding – Shock

    Miami Valley – Expected Splits CEO Elephant

    Now lets play the linking game from this organization to the Downtown Dayton Partnership, Chamber of Commerce and the Dayton Development Coalition. See any trends in the Staff or the Trustees/Boards of Directors?

    If you ever wonder why there is Groupthink, these links should cinch it.

    Bryan Bucklew – Miamisburg Resident is a nice linchpin – Former Chamber VP, Close Friend of Husted and check the links to Group Think.

    Greater Dayton Hospital Association Staff

    Downtown Dayton Partnership Trustees

    Greater Dayton Regional Transit Authority Trustees

    Bryan is not on the Pathetic Get Midwest but plenty of his Supervisors are

    Bryan’s former Employer has plenty of the non profit Crew

    So Hospital Boys stopping putting up scoreboards on suburban stadiums and start buying advertising in the DDN or they might actually have to do there job!

  10. Meat Eater February 23, 2009 / 6:29 am
    Perez isn’t an entrepreneur, or even a business man. He’s employed as a professional schmoozer to target wealthy locals and charm them into paying for a “naming opportunity” .

    If the DDN wants a Pulitzer, it should start asking questions about the huge (and I mean HUGE) cash donations that have been squandered. It’s criminal.

  11. Gene February 23, 2009 / 8:41 am
    They may tell the other side of the story(actors and the Hollywood crowd), as they are cashing $20 million checks, polluting the earth with their houses and cars, employing and underpaying illegals, buying crap that third world slaves make, and over all become the worlds largest frickin hypocrites. You are right, they have big hearts. And bigger egos.
  12. tg February 23, 2009 / 10:13 am
    There are MANY reasons why health care is so expensive, not just CEO compensation. Sprawl factors into it – when hospital networks have to continue to add satellite locations it means more of everything – staff, furniture, bricks & mortar, equipment, medicine, supplies, etc, etc.

    Doctors have time share locations at mulitple locations so they’re spending more time in cars than with patients. And because of malpractice insurance and other costs, they need to see 80 people a day to break even. What kind of care is that providing?

    Plus everyone is a specialist and no one is looking at the entire patient. ENT, cardiologists, endocrinologists, OB/GYNs, orthopedics, allergists, internists, neurologists, etc.

    Technology is a big part of it. Remember the days of house calls when the doctor showed up with his medicine bag and everything he needed inside it?

    Oh, and let’s not forget the drug companies and the drug reps and the various meds they peddle.

    Oh, paperwork – that’s part of it too. And all the claims the doctors file, but the insurance companies take forever paying. And don’t forget the claims the patients file, but their insurance refuses to pay. And it cost a lot for the insurance companies to hire and train all those people to try to find reasons to deny the claims.

    It’s pretty darned complex and I don’t know what the answer is, but I’m pretty sure policies that redistribute the wealth to the wealthy and eliminate the middle class are not the way to go.

  13. Donald Phillips February 23, 2009 / 11:20 am
    I love the irony of all this our-healthcare-system-sucks bitching, while at the same time the Most Metroids are now pinning their hopes on a physician who made a fortune administering this very healthcare system.
  14. GladGirl February 26, 2009 / 2:29 am
    From an insider’s view, my husband has been employed at MVH 33 years.
    He’s seen a lot of changes and with each change they get less and less employee friendly.
    Employees all received the “no raises this year” letter.
    The employee discount for food was rolled back and the cafeteria prices increased. (not that it effects us much because we’re brown baggers.)
    New uniforms were made mandatory to improve patient satisfaction- based on a thesis of a staff nurse.
    Letters went out stating no more “incentives” such as employee holiday / Christmas dinner in the cafeteria would be offered. The 25 year dinners are probably going bye-bye too.
    Yet spending $30,000.00 on potted palms to line the entrance and constant remodeling continue.
    Insurance premiums continue to rise as the coverage decreases.
    How about investing in front line people and developing a supportive climate for employees to boost productivity and morale? Who REALLY needs a million dollars a year to have a healthy and comfortable life? The employees don’t begrudge their leaders and feel grateful for a place to work but, come on. You spend the day with peoples lives literally in your hands then loose sleep over not being able to pay for your own child’s medical bills?
    Corporations need to be reminded of the John Patterson approach. ( A Dayton Original mind you.)
  15. David Esrati February 26, 2009 / 7:12 am

    @gg- well said.

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