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Some Top Hospitals Shun CEO Bonus Pay

Should hospitals award CEOs bonuses for growth and profits or for quality and efficiency? That’s the wrong question, some authorities believe. They think hospital bosses shouldn’t get any bonus pay.

Some Top Hospitals Shun CEO Bonus Pay


“I don’t think there’s a role today for hospital CEOs to have a bonus program,” said Dr. James Weinstein, CEO of Dartmouth-Hitchcock health system in New Hampshire. “Strategic growth is an enigma to me. What we’re trying to do is manage people and we’re trying to keep them outside of a hospital. Our success is keeping people away from health care systems and providing health.”

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KHN, in collaboration with ABC News, investigates hospital leader pay at nonprofit hospital systems.

Nonprofit hospitals have mimicked corporate America by motivating CEOs with payments tied to the bottom line and other goals. But boards and CEOs at some of the most admired and efficient health systems in the country believe any kind of incentive pay for the top boss is a mistake.

Weinstein, a spine surgeon who took over at Dartmouth-Hitchcock in 2011 after years of studying health-cost disparities at The Dartmouth Institute, isn’t eligible for an incentive bonus. At the Mayo Clinic, CEO Dr. John Noseworthy “typically does not receive bonus compensation,” a spokesman said.

Neither does Dr. Delos “Toby” Cosgrove, CEO of the Cleveland Clinic, which was praised by President Barack Obama along with Mayo as delivering “the highest quality care at costs well below the national norm.”

Bonuses make it too easy for leaders to focus on finances instead of patients, said Joseph Scaminace, head of the board of directors’ committee that sets executive pay at the Cleveland Clinic.

Some Top Hospitals Shun CEO Bonus Pay


“Whenever the subject has ever been raised by any of our board members, it very quickly gets tabled as something that’s very inappropriate,” Scaminace said. “The culture of the clinic is the very core of the clinic. To tinker with that culture with incentives that are focused on return on investments wouldn’t just be folly. It would be so wrong.”

Weinstein, who eliminated 400 jobs in 2011 in an effort to control costs, says that he’s already very well paid and that his job requires him to run the highest-quality, most efficient system he can, even without bonuses.

“I believe if you do the quality right, the finances will work themselves out,” he said, suggesting financially successful hospitals could give resources back to the community instead of endlessly growing.

“Maybe we should provide [cholesterol] drugs free to everybody who lives in New Hampshire,” he said. “It shouldn’t be just about building more buildings and new structures.”

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Cost and Quality Health Industry