Health Care is One of the Largest Economic Engines in Westchester
(Submitted to The Journal News) I read with interest your article on hospital CEO salaries, which you portrayed as excessive, especially in light of rising health-care costs and Gov. Andrew Cuomo’s recent order to restrict to $199,000 the amount of state money not-for-profit organizations can use for executive compensation.
I think people often overlook the fact that hospitals and their executives are actually under-compensated for the work they do and the responsibilities they bear. Some things to consider:
A hospital is a complex service organization. A hospital CEO is responsible for overseeing and guiding his staff through a maze of financial and regulatory challenges, as well as making sure safety and performance standards are at the highest possible levels.
The CEO manages complex technological and physical plant operations, as well as whatever issues arise when dealing with highly educated and skilled workers. They also may be managing physician groups, clinics, and an array of other services.
A hospital is an economic engine. CEOs are ever mindful that their hospitals are often the largest employer in the community. Thousands rely on their local hospitals not only for maintaining good health, but also for their livelihoods and their community’s economic welfare. In this region, hospitals contribute almost $9 billion to the regional economy and employ over 30,000 people; making it the largest economic engine.
A hospital is usually organized as a not-for-profit entity. Had its CEO been in the private sector, you can be certain that his/her compensation would be drastically higher. By way of comparison, take a look at the salaries of health-care insurance provider CEOs of five of the largest publicly traded health insurance companies: Aetna, $18.60 million; AmeriGroup, $5.29 million; Cigna, $12.23 million; Wellpoint (BC/BS), $8.66 million; and United, $6.72 million.
Health-care insurance is a necessity for everyone, yet these insurance providers actually become a costly expense for the community. They do not contribute to the tax base, nor do they invest in the state and its local communities to protect the local health care system. Instead, health insurance premiums are going up, while reimbursement is declining. Where is the money going? Not into our community.
In those cases where a hospital is organized as a public benefit corporation, like the Westchester Medical Center, a hospital CEO must deal with the skyrocketing costs of health care brought about, in part, by declining reimbursement from Medicaid and Medicare, and the extraordinary pressures of rising pension and post-retirement health costs, because so many of their employees are part of the NY State pension system.
A hospital is a community organization. And the individuals who decide on a hospital CEO’s salary and compensation, serve on that hospital’s board and usually live within the very same community. They base their decisions on research, competitive market analyses, and responsible financial projections.
So, before we rush to judgment about local hospital CEOs’ million-dollar salaries, I urge everyone to stop for a moment and consider just how important that CEO is to the wellbeing of our community.
These men and women are competent experienced officers who daily face unfathomable challenges posed by burgeoning health care costs and managing a complex organization. When all is said and done, a critical mission drives them: to provide quality healthcare to the entire community.