HOSPITAL EXECUTIVES' PAY ROSE SHARPLY IN A DECADE

Abstract

WASHINGTON, Sept. 29—The rise in nonprofit hospital executives' compensation in the 1980's was one of the fastest-growing components of the overall rise in medical costs, with the earnings of a few executives at the most prestigious institutions approaching or exceeding $1 million. Although executive pay represents a small fraction of total revenues in any hospital, it is a matter of particular interest to Internal Revenue Service auditors. Special audits of about 20 hospitals nationwide are under way, examining if these educational and charitable institutions, in their zeal to compete in the high-stakes health-care field, are straying from the ground rules governing tax-exempt status. Among other things, these rules prohibit nonprofit organizations from providing "excessive" benefits to private individuals, a definition open to a range of interpretations. IRS officials said that executive salaries are one of the issues under scrutiny in their audits... While salaries for top hospital executives around the nation tend to run in the $200,000 range, with compensation routinely $100,00 to $200,000 higher for doctors serving as chief executive officers, a few hospitals pay at double or triple the base rates... [The] president and chief executive officer of New York City's Memorial Sloan-Kettering Cancer Center made more than $1 million in total compensation in both 1990 and 1991 . A 1988 "signing bonus," . . . brought his total compensation for that year to $2.2 million. The center employs 5,600 and has a $700 million budget for 1992. [The] head of Brigham and Women's Hospital in Boston made $872,628 in total compensation in 1991 . The teaching hospital, affiliated with Harvard Medical School, employs about 8,000 people.