What Factors Influence a Hospital CEO's Salary?

CEOs who are employed at nonprofit hospitals in the U.S. receive higher salaries if they are more experienced with advanced technologies and if the hospital they are employed at has higher levels of patient satisfaction, according a study published in JAMA Internal Medicine.

The study included 1,877 CEOs from 2,681 private nonprofit institutions in the U.S. Researchers evaluated the following information:

• Publicly available Form 990 tax returns from GuideStar (2009)
• American Hospital Association’s annual survey
• Rural-urban commuting area codes
• Hospital Compare data—including the Hospital Consumer Assessment of Healthcare Providers and Systems survey
• Medicare cost reports
• Medicare impact file

CEOs who were more experienced with advanced technologies made $135,862 on a technology index, which combined various advanced technologies into one score—positron-emission tomography, magnetic resonance imaging and the capability of performing complex operation. In addition, hospitals with higher patient satisfaction scores compensated their CEOs about $51,706 more than hospitals with lower patient satisfaction scores.

The unadjusted mean compensation was reported at $595,781. CEOs in the lowest compensation decile had a median compensation of $117,933. The majority of this group oversaw small, non-teaching hospitals in rural areas. CEOs in the largest compensation decile had a median compensation of $1,662,548. The majority of these CEOs oversaw larger, urban hospitals—and more often were major teaching hospitals.

Researchers concluded that “executive compensation metrics are a powerful reflection of the priorities of an institution and likely have the ability to shape the focus of the CEO.”

Quality of care delivered, patient outcomes and community benefits were factors that did not have an impact on CEO compensation in this study.