An article discussing the CEO salaries of Midwest hospitals was interesting to me for several reasons. In the article Nonprofit hospital CEO salaries in the Midwest: Who’s on top?. Randall O’Donnell who is the CEO at Children’s Mercy Hospital and Clinics; Kansas City, Missouri, makes a cool $6 million a year.
That’s a $6 million salary at an organization that is nonprofit. The organization may be called a nonprofit, but the CEO certainly ain’t going hungry.
First I thought:
- “I could do it for $3 million.”
Then I thought:
- “What on earth do people do with a $6 million annual salary?”
And finally I thought:
- “How many nurses could they hire if they their CEOs made a measly $1 million a year?”
- So let’s examine the scenario of the CEO taking a pay cut and getting a pitiful $1 million annual salary.
- How many nurses could that hospital employ for 1 year on $5 million?
- According to indeed.com
the average nurses annual salary is $65,000 a year in Kansas City, MO
- . Simply Hired puts it at
$49,000 average annual salary for a registered nurse.
- And according to ehow.com, in 2009 the
average registered nurse salary in Missouri was $55,150
- .
- So lets pick the median of the 3, and go with $55,150.
How many nurses with a salary of $55,150 annually could be hired for $5 million?
$5,000,000 divided by $55,150 is 90.67.
At least 90 nurses could feed their family and help to provide better patient care if the hospital CEO didn’t need to $6 million annually to stay put.
Here are the rest of the salaries reported in the article.
- Randall O’Donnell; Children’s Mercy Hospital and Clinics; Kansas City, Missouri: $6 million
- Javon Bea; Mercy Health System; Janesville, Wisconsin: $4.5 million
- James Skogsbergh; Advocate Health Care; Oak Brook, Illinois: $4 million
- Dean Harrison; Northwestern Memorial Hospital; Chicago, Illinois: $3.4 million
- Richard Pettingill; Allina Health System; Minneapolis, Minnesota: $3.3 million
- Joseph Swedish; Trinity Health; Novi, Michigan: $2.7 million
- Lowell Kruse; Heartland Regional Medical Center; St. Joseph, Missouri: $2.5 million
- Steven Lipstein; BJC Health System; St. Louis, Missouri: $2.2 million
- Kevin Schoeplein; OSF Healthcare System; Peoria, Illinois: $2.2 million
- Thomas Sieber; Genesis Healthcare System; Zanesville, Ohio: $2.1 million
- Paul Pawlak; Silver Cross Hospital; Joliet, Illinois: $2 million
- Toby Cosgrove; Cleveland Clinic; Cleveland, Ohio: $1.9 million
- William Petasnick; Froedtert Memorial Hospital; Milwaukee, Wisconsin: $1.9 million
- Fred Manchur; Kettering Medical Center; Dayton, Ohio: $1.9 million
- Patrick Magnon; Children’s Memorial Hospital; Chicago, Illinois: $1.8 million
- Kenneth Hanover; University Hospital; Cincinnati, Ohio: $1.8 million
- J. Luke McGuinness; Central Dupage Hospital; Winfield, Illinois: $1.8 million
- Daniel Evans Jr.; Clarian Health Partners; Indianapolis, Indiana: $1.8 million
- James Madera; University of Chicago Medical Center; Chicago, Illinois: $1.8 million
- James Anderson; Cincinnati Children’s Hospital Medical Center; Cincinnati, Ohio: $1.8 million
Via Medcity News: Nonprofit hospital CEO salaries in the Midwest: Who’s on top?
Let us not forget that nonprofits usually receive sizeable donations to help fund their facilities. And of course they eagerly accept them. But $6 million a year for a CEO responsible for running a hospital? Really?
Personally, I think $6 million could be use much more responsibly to run a hospital.
Where do you think the money should be spent in nonprofits? CEO pockets or on more nurses to better staff the units?
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90 is a tidge high – mainly because those salaries are not accounting for the total compensation package that is costly – insurance/benefits/taxes on wages. The total compensation for a nurse at $55 is probably more in the ballpark of $75-80, so the number is a little lower, but the point isn’t necessarily the quantity of nurses it’s the quality of nurses that can be hired in light of a $5mill overage on salary (assuming of course he’s worth $1 mill). Rand O’Donnell has, with the help of an incredible team, built a children’s brand in the KC market. Many CEOs have taken on this task in other hospitals for much…much less.
There are some very interesting articles out there about this. Children’s hospitals have some of the most highly compensated CEO’s and yet according to the Centers for Medicare & Medicaid Service (CMS.org: https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/Age-and-Gender-Items/Age2004.html) children make up only 26% of the patient population and only 13%! of PHS spending (2004). Yet the working age group ( the adults) and the elderly comprised the most: working age group (adults) 52% of pt population & 62% of spending! Pediatric care represents a very small piece of the patient pie, and yet the compensation for its CEO’s rank the highest. Non-profit hospitals are coming under more scrutiny these days, but their financials are far less scrutinized than their for-profit counterparts – even though compensation packages are similar, if not higher. Just some resources: http://www.arktimes.com/ArkansasBlog/archives/2011/09/26/childrens-hospitals-billion-dollar-businesses-with-ceos-to-match, http://www.mcclatchydc.com/2011/09/25/v-print/124653/a-glimpse-at-the-high-pay-for.html. …Ps. On a personal note, interesting how there isn’t a single female name among the CEOs. Yet, nursing is predominantly female.
I think as health care changes, all hospitals should become not for profit. Growth and reimbursement is already dictated by how well of a job they do. CEO salaries and everyone else’s salaries should be done that way also. Profits should go for jobs well done and back into the organization. Not just into stock holder and CEO pockets.
Nurses should be able to charge for services rather than lumped in with the room rate. Not only would that increase our respectability, but would ensure good nursing care and weed out those that just come to work for the pay check.
At the risk of being the unpopular voice (and no, I am not a CEO, I am a staff nurse with a business degree), if we want to attract the best and brightest to the CEO positions of non-profits, we must have competitive salaries, as compared to the private sector. I would have no idea what to do with that amount of money, but I also realize that being a great CEO comes with much responsibility. Is it worth $6 million? I don’t know. But I do know that if the jobs are not attractive in the non-profits, those really smart people will go to for profit jobs, and the non-profits lose. Flip side, there should be some common sense in the amounts of salaries and the ways that resources are allocated, so that we get the best bang for our bucks in the health care arena.
This is an awesome idea, Brittney and wonderfully framed.
That money could be used to contribute to safer, kinder care and healthier caregivers. I personally would also look at better staffing and training for nurse assistants too.
I don’t have a problem with ‘for profit’ per se, BUT it has to be within ‘reason’. And often isn’t. Making a profit could be different from being greedy and making fortunes off of people suffering. Big pharma, insurance companies, specialty docs, law firms….
I read recently where the David Cordani, the CEO of Cigna Health Care made $19.1 million in 2011! How many nurses’ salaries would this add up to? (http://www.pnhp.org/news/2012/august/fireworks-orchestras-and-dancing-doctors)
Why not cap profit and for profit? That’s even better don’t you think? I also bet that a well-supported nursing unit would make, could make an organization shine unlike ANY CEO!
Beth
And they consider NURSES costly for the hospitals? What a load of you-know-what…..it reminds me of all these banking higher-ups going out for lavish parties and drawing HUGE salaries while their bank get “bailed out” by the taxpayers who are struggling to even maintain a mortgage payment. Good article, now let’s hope that some people on these non-profit boards will read this!
First I think that a CEO of a NON-Profit hospital is outrageous, these hospitals are supposed to be “charitable organizations” that were formed to provide a service. I can think of a ton of things that 6 million could pay for. This is part of the reason I choke when people make nasty comments about the fact that I work at a for profit hospital