Thursday, August 20, 2015
Exorbitant Compensation
According to the August 10 issue of Modern Healthcare, the
top ten compensation amounts for healthcare executives in 2013 ranged from 3.6
million to 8.4 million. Then the August
18 issue of The Boston Globe included an article about CEO salaries in
Massachusetts teaching hospitals, all of which were well into seven figures,
the highest quoted for the full year of 2013 being 2.6 million.
Spokespersons quoted attributed these salary levels to
competition and market forces.
I don’t believe that.
I have yet to read of a healthcare CEO being paid in the millions being
attracted to another job by more pay.
I think what we are seeing is a social mechanism that has
gone off the rails. I think what has
happened is that compensation committees of boards of trustees started using
consultants and that those consultants found that the way to become popular was
to find ways to justify high compensation levels. Boards are populated in large part by CEOs of
other organizations who are typically overpaid themselves and find it easy to
adopt those consultants’ recommendations.
The thing has gotten out of hand and nobody as yet has found
a way to bring it back under control.
There are some indications of popular discontent over these exorbitant
salary levels, but so far it doesn’t seem to be having much effect.
