Our healthcare systems are bleeding beyond any hope of life-saving transfusions. Massive cuts are being made in direct patient services. Junior staff are being asked to take on more responsibility and work in riskier, often violent environments for the same pay. So, do our senior administrative staff deliver to the level of their remuneration? 

High salaries seem to be paid just to retain CEOs.

What should be the fundamental basis for a healthcare CEO’s pay: size and complexity of the organization; organizational revenue; patient outcomes; staff retention, and/or community engagement? Should there be a difference between for profit and non-profit organizations? 

The highest-paid executive of the American Red Cross, a national non-profit with 600 chapters and revenue of $3.6 billion, received about $800,000 in total compensation in 2018. Then there are non-profits and non-profits in healthcare. In 2018, Bernard Tyson, then-CEO of non-profit health care giant Kaiser Permanente, made nearly $18 million. That is in comparison with the pay for top executives in most non-profit industries, which was between $100,000 and $200,000, or in comparison with hourly non-profit workers, who routinely receive less than $40,000 a year.

Critical position vacancies are costing healthcare about $8 billion every year. A healthcare leader search can take up to six months and one in three open positions go unfilled for four months.

So maybe the high remuneration packages are paid just to retain top-line staff rather than based on performance. Top-level resignations have a domino effect. More than three-quarters of all chief medical officers leave their organizations within one year of the CEO’s departure, followed by half of chief operating officers, as well as more than one-third of chief finance officers, human resource officers and chief information officers.

  It is time for some realistic benchmarks for senior staff remuneration as has occurred on the clinical side. For example, an equitable multiplier between CEO pay and general employee pay would create some transparency for all staff and certainty for senior staff.  Surely even a successful healthcare CEO should not be paid 200 times more than the average non-profit worker.

Of course,  CEOs should always be rewarded for improving clinical outcomes, patient safety, and racial and gender health disparities. However, complexity of the job should also be considered, not only based on the size of the hospital or system but also the patient mix and financial cushion of each clinical setting.