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Hospital CEO pay rose 18 percent from 2006 to 2009

New Hampshire Union Leader

July 02. 2012 2:04PM

CONCORD - New Hampshire's 23 non-profit hospitals raised chief executive officer pay an average 18 percent from 2006 through 2009, while overall private sector wages rose by just 4.8 percent, the New Hampshire Attorney General's Office reported Monday.

At a press conference following the release of a study by N.H. Center for Public Policy Studies, Attorney General Michael A. Delaney said the report, which covered salaries from 2006 through 2010, showed no correlation between hospital executive salaries and their level of charitable care to the community or the goals of the hospital.

'I recognize that there should be a stronger correlation between CEO wages and the completion of the charitable mission of our non-profit hospitals,' Delaney said.

Steve Ahnen, president of the NH Hospital Association, said in a statement, 'The report shows that CEO compensation at New Hampshire's non-profit hospitals is very much in line with compensation offered by hospitals throughout Northern New England, and the report will serve as a benchmark for hospital boards as they look to set compensation and fulfill their fiduciary obligations at their institutions in the future.'

But Delaney said he was particularly concerned that comparative hospital CEO compensation data was being shielded by Olney/HR Advantage, a Boston-based consultant to several of the hospitals, as being proprietary and those figures could not be included in the N.H. Center for Public Policy Studies report.

'The data was backed out of the center report,' he said.

'We view it as a problem,' he said.

Olney did not immediately return a call from New Hampshire Union Leader.

In a separate conference call, New Hampshire Center for Public Policy Studies Deputy Director Daniel Barrick said the study showed the majority of the hospitals use best practices.

But, he said, 'We feel there is a lot more analysis that can be done on the question of how to connect executive compensation to hospital performance.'

Anthony I. Blenkinsop, senior assistant attorney general and director of the Charitable Trusts Unit, said hospitals submit information on Form 990 to the IRS yearly but by the time the Attorney General's Office gets a copy of the report, the data can be as much as a year old.

"One of the points we want to try to figure out is how we can get that information as quickly as possible so it doesn't get out of date," Blenkinsop said. Procedures still need to worked out, but he said, the attorney general's office has statutory and common law authority to collect the data.

Delaney commissioned the report in March 2011. It grew out of the attorney general's review of the failed affiliation attempt between Catholic Medical Center and Dartmouth-Hitchcock Health. In a report opposing that affiliation in May 2010, Delaney said he would review hospital CEO compensation.

At the time, Delaney noted the total compensation paid to former CMC President/CEO Alyson Pitman Giles had more than doubled over four years - to $1.36 million in 2008 - and was significantly higher than her peers both in compensation and compared with operating revenues.

The report showed that the average total compensation paid to a CEO in New Hampshire was $485,664 in 2008. The highest CEO compensation that year was for Pitman Giles and was nearly three times the average, while CMC's patient revenue was only the fourth highest, the attorney general's office said. The average CEO compensation for all hospitals drops by 8 percent when CMC is excluded from the calculation.

Reportable packages include bonuses, benefits and deferred compensation, which the executives normally won't see until they retire or they fulfill employment contracts. In Pitman Giles' case, the deferred compensation and a one-time retention bonus account for more than a half-million dollars of the total reported.

A New Hampshire Union Leader review in 2010 of a few compensation packages found wide variations. At Exeter Hospital, Kevin Callahan saw his compensation package fall $41,000, to $748,000, after the hospital lost $944,800 during the 12 months that ended Sept. 30, 2009.

Doug Dean, president and chief executive of Elliot Hospital in Manchester, saw his total compensation in 2008 increase 12 percent, to $679,000. But that was about half as much as the earnings reported for CMC's Pitman Giles.

Pitman Giles stepped down as CMC's president and CEO in mid-January after 13 years at the helm. The hospital is conducting a search for a new president and CEO.

Joseph Graham, chairman of CMC's board of directors, said in a statement issued Monday, 'The attorney general's report offers helpful guidance and information for hospital boards to consider. We look forward to future conversations with the attorney general and others in our community about how best to be good stewards of our charitable mission.

"We are pleased to know that the process we have followed at CMC is consistent with and complies in all respects with state and federal law," he said.

Three hospitals - St. Joseph Hospital in Nashua, Valley Regional Hospital in Claremont and Upper Connecticut Valley Hospital in Colebrook - did not follow all IRS guidelines concerning CEO pay, the report said. Principally, they did not keep minutes of meetings where discussions were held and decisions made on compensation.

Speaking of St. Joseph's Hospital, Upper Connecticut Valley and Valley Regional, Barrick said, 'We didn't see any evidence they kept minutes of the actual meetings.'

Delaney said he would reach out to those hospitals this week to discuss the problem.

Mike Fuerst, vice chairman of the board of directors for Valley Regional Hospital, said, "The whole issue of documentation is to make sure there is oversight of how someone is getting paid. Valley Regional clearly uses a process to adjust salary based upon performance and meeting goals and taking into account other hospitals and other health care salaries.'

Fuerst, an attorney in Claremont, said Valley Regional CEO Claire Bowen's salary fluctuates. The report showed her salary as $293,209 in 2009 up 11.6 percent from the year before, but down 0.4 percent in 2010 to $292,064.

Androscoggin Valley Hospital issued a statement saying,'The Attorney General has confirmed that our Board follows all appropriate processes to establish a good and trustworthy executive compensation program.'

The other hospitals could not be reached for immediate comment.

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