The CEO of Orlando’s second largest hospital system resigned last week after a year of bad press for Orlando Health, Inc. Most of the controversy has centered around the slashing of jobs and pay for the primary asset of the hospital system: its staff of health care providers. But the hospital board’s “acceptance of resignation” (corporate-speak for firing), has nothing to do with the hospital’s troubled relations with its front line workers. As the Orlando Business Journal was quick to report, this change of guard was about one thing: the hospital’s poor financial performance. So far this year, the eight hospital conglomerate is losing $12.2 million on its operations. (However, according to the OBJ, the hospital corporation’s investment income turns this red ink into a positive cash flow of 13.2 million dollars. Yes, you read that right: during the first three quarters this health care conglomerate generated $25 million from its capital assets!)
Of all the news reports of this development, only the Orlando Sentinel commented on the resigning CEO’s compensation, which came to about $1.2 million for last year. (We will have to wait and see what kind of golden parachute and send-off compensation awaits the departing chief executive for this year). So here we have a hospital corporation, organized as a non-profit and struggling with its financial standing, compensating its CEO as a millionaire.
Actually, this is not news at all. During 2010, OHI paid its CEO John Hillenmeyer twice that amount. Florida Hospital, another so-called non-profit, bested that by paying its CEO $2.93 million. According Becker’s Hospital Review, during 2010, the CEO’s of these two Orlando hospitals ranked in the top ten of the highest grossing non-profit hospitals in the United States. For that year, the median total compensation of non-profit hospital CEO’s stood at $3.83 million. And the trend is toward even higher levels of compensation: during 2011, median total pay for the top 25 highest paid chief executives climbed 12% while base salaries grew 3% year over year, according to Modern Healthcare’s analysis of recent public information available on not-for-profit compensation. According to that report, one of the arguments for this level of compensation is that these so-called non-profits have to compete for talent with the for-profit hospital corporations, where the average CEO compensation for the 12 largest for-profit hospitals stands at a whopping $14 million (that figures excludes stock options).
So OHI is on the hunt for its next millionaire CEO. You can expect he or she will do better than the last one. The workers at the hospital who will be taking care of you or your family? Not so much…