Compensation of Chief Executive Officers at Nonprofit US Hospitals

Abstract

Hospital chief executive officers (CEOs) can shape the priorities and performance of their organizations. The degree to which their compensation is based on their hospitals' quality performance is not well known. To characterize CEO compensation and examine its relation with quality metrics. Retrospective observational study. Participants included 1877 CEOs at 2681 private, nonprofit US hospitals. We used linear regression to identify hospital structural characteristics associated with CEO pay. We then determined the degree to which a hospital's performance on financial metrics, technologic metrics, quality metrics, and community benefit in 2008 was associated with CEO pay in 2009. The CEOs in our sample had a mean compensation of $595,781 (median, $404,938) in 2009. In multivariate analyses, CEO pay was associated with the number of hospital beds overseen ($550 for each additional bed; 95% CI, 429-671; P < .001), teaching status ($425,078 more at major teaching vs nonteaching hospitals; 95% CI, 315,238-534,918; P < .001), and urban location. Hospitals with high levels of advanced technologic capabilities compensated their CEOs $135,862 more (95% CI, 80,744-190,990; P < .001) than did hospitals with low levels of technology. Hospitals with high performance on patient satisfaction compensated their CEOs $51,706 more than did those with low performance on patient satisfaction (95% CI, 15,166-88,247; P = .006). We found no association between CEO pay and hospitals' margins, liquidity, capitalization, occupancy rates, process quality performance, mortality rates, readmission rates, or measures of community benefit. Compensation of CEOs at nonprofit hospitals was highly variable across the country. Compensation was associated with technology and patient satisfaction but not with processes of care, patient outcomes, or community benefit.