Hospitals furloughed and let go of hundreds of employees during the height of the pandemic in 2020, when forced shutdowns in elective surgeries decimated hospital revenues. But that didn’t stop some hospital executives from receiving compensation increases, new filings show.
The figures, obtained by The Boston Globe, were collected from forms recently filed with the IRS. Total compensation is a reflection of an executive’s base salary, bonus pay, retirement benefits, and more. The disclosure is required of all nonprofits, but the figures typically lag by almost two years.
The data provide a window into the competitive salaries executives received amid a tight C-suite labor market and as they steered hospitals through the first year of a global pandemic. Overall, pay increases trended more modestly than they had in years past, with fewer hospital executives receiving double-digit pay increases and several reporting reductions.
Some outside experts, however, were critical that even as health care workers faced earnings and sometimes job losses, those cuts didn’t translate to all executives.
“It’s not pay for performance. It’s just pay,” said Alan Sager, a professor of health law, policy, and management at Boston University School of Public Health. “There’s a deep lack of consideration for the circumstances of all the people who aren’t getting pay increases and total disregard for how it looks.”
Dr. Anne Klibanski, chief executive of the state’s largest health system, Mass General Brigham, took home the largest compensation package, earning $4.3 million in total compensation in 2020, which was 3.6 percent larger than in 2019. The system did not institute furloughs or layoffs and ultimately reversed salary freezes, though the compensation increase came as MGB reported one of its worst operating losses.
Scott Sperling, chairman of the Mass General Brigham board of directors, said the system was committed to offering competitive executive compensation.
Other executives saw increases even as employees saw cuts. By the end of July 2020, Beth Israel Lahey Health had furloughed 9 percent of its workforce, or approximately 3,150 employees. Furloughed employees were paid only for the first four weeks. By October, 175 people had been let go.
Also, ER doctors at Beth Israel Deaconess Medical Center had half their quarterly bonuses withheld and deferred, and some doctors in BILH-affiliated groups had their retirement plan employer contributions suspended.
Executives recognized the financial pressure at the time and volunteered for reductions. Beth Israel Lahey Health president and chief executive Kevin Tabb said he would forgo half of his salary for three months.
Yet Tabb still reported a 14.2 percent increase in total compensation in 2020 to $3.7 million.
A spokeswoman for the system said that Tabb’s compensation increase reflects the fact that BILH became a system on March 1, 2019, and 2020 was the first full year Tabb worked as head of the system. She added that the system has “prioritized investments that support patient care, including decisions around staffing, benefits, and compensation at all levels.”
Similarly, in March 2020, Boston Medical Center furloughed 10 percent of its staff — approximately 700 jobs — as it looked to conserve financial resources.
In its fiscal 2020 financials, which ended in September 2020, Boston Medical Center also reported receiving $174.8 million in federal relief money, as well as $94.8 million in supplemental payments from the state.
That same year, Kate Walsh, chief executive of the hospital, reported a 14.8 percent increase in total compensation to $2.3 million in 2020.
In a statement, the health system praised Walsh’s leadership through the pandemic and said the hospital maintained benefits for furloughed workers.
“CEO compensation was tied to annual health system performance targets that were set prior to the COVID pandemic,” said spokesman David Kibbe.
In the early months of the pandemic, Southcoast Health, which has hospitals in New Bedford, Wareham, and Fall River, furloughed 750 employees and later laid off 100. But chief executive Keith Hovan reported a 7.4 percent increase in compensation to $2.7 million.
Tufts Medicine, then known as Wellforce, furloughed 719 employees— or 5.5 percent of its workforce — for three months in April 2020. Another 1,236 employees had their hours and earnings reduced. The system ultimately let go of 232 employees. Chief executives and other senior executives also said they had volunteered for three months of pay cuts.
The system’s top executive, CEO Michael Dandorph, who started the job in January 2020, reported $1.5 million in total compensation that year — lower than many other chief executives of Boston-based systems.
However, some hospital executives under him reported large increases. Michael Apkon, chief executive of flagship hospital Tufts Medical Center, reported a 29.9 percent increase in total compensation to $2.2 million through September 2020, when he left.
In an interview, Dandorph said the board worked closely with a national compensation consultant to look at executive compensation, assessing the scale of the organization, the scope of that person’s responsibilities, and market rates.
Christine Madigan, chief consumer officer for Tufts Medicine, added that Apkon’s 2020 compensation increase was the result of payment of deferred compensation obligations as he left the organization.
Steve Sullivan, managing director at compensation consulting firm Pearl Meyer, said the leadership labor market is extremely tight. Some estimates are that the cost of replacing a chief executive and the lost business related to that turnover could be three to five times the annual cost of the executive’s pay.
Paying retention bonuses and making discretionary incentive awards “is the cost of doing business,” Sullivan said. “It’s not whether it’s right or wrong. It’s what they have to do.”
Some executives did take a financial hit. Cape Cod Healthcare furloughed 600 employees early in the pandemic and ultimately let go of 118. Michael Lauf, chief executive of Cape Cod Healthcare, saw his total compensation decline 10.6 percent to $1.7 million in 2020.