Partners CEO tops hospital pay list
Partners HealthCare’s chief executive, Dr. David Torchiana, topped the list of executives at the state’s largest nonprofit hospitals who received sizable pay raises in 2015, according to their most recent public filings.
Torchiana, who oversees the state’s largest health system and largest private employer, earned nearly $4.3 million in total compensation. That includes a base salary of about $1.9 million, plus bonuses and retirement benefits.
Much of Torchiana’s retirement earnings were previously reported, according to Partners. His reported compensation in 2015 increased threefold from the previous year, when he was head of the physician network at Partners’ largest hospital, Massachusetts General.
Partners also paid about $2.7 million in 2015 to its previous chief executive, Dr. Gary Gottlieb, who left the organization in the middle of that year.
Nonprofit organizations, including hospitals, must detail their pay packages in filings with the Internal Revenue Service, but the figures lag by more than a year.
Total compensation for the chiefs of Partners’ two biggest hospitals fell in 2015. Dr. Elizabeth G. Nabel of Brigham and Women’s Hospital earned $2.1 million, less than half of her 2014 earnings, when she received a bump in deferred compensation. Dr. Peter L. Slavin of Mass. General took home $2 million in 2015, about 7 percent less than in the previous year.
Partners’ board chairman, Edward P. Lawrence, said in a statement that the organization “must provide competitive wages and benefits in order to attract and retain the best individuals at a time when health care is undergoing sweeping change.”
Hospitals are under intense pressure to control spending, particularly in Massachusetts, where the law requires them to keep the growth in total expenditures to 3.6 percent a year. (Health care spending in Massachusetts actually rose 4.1 percent in 2015, according to state figures.) Critics, including labor unions, often target executive compensation as a source of excess spending.
But while most of the state’s large hospitals are structured as nonprofits, they are also among Massachusetts’ biggest and most complex businesses. Partners, for example, collects more than $12 billion in annual revenue.
The CEOs of large hospitals have “unbelievably complex jobs,” said Thomas P. Flannery, senior client partner at Korn Ferry Hay Group in Boston, a consulting firm. “I would say they rival any for-profit organization in the world.”
Compensation experts said pay for hospital executives is increasingly being tied to performance. This includes financial performance, but also quality of care and patient satisfaction scores.
“The Boston market is very hyper-competitive for talent,” added Deb Bilak, a partner in the Boston office of the large consulting firm Mercer.
It’s not unusual for a CEO’s total compensation to rise or fall depending on the amount of incentive pay and retirement benefits the executive receives in a given year. At Burlington-based Lahey Health, compensation for the chief executive, Dr. Howard Grant, fell 28 percent to $1.6 million in 2015. But Kevin Smith, who ran Lahey’s Winchester Hospital, received nearly $3.3 million in 2015, the year he stepped down from the organization.
Boston Children’s Hospital chief executive Sandra Fenwick saw her compensation rise about 10 percent to nearly $1.9 million. At UMass Memorial Health Care in Worcester, the CEO, Dr. Eric Dickson, received a 14 percent increase, to $1.8 million.
Dr. Kevin Tabb of Beth Israel Deaconess Medical Center took home $1.6 million, up about 9 percent from the prior year. Boston Medical Center’s Kate Walsh was paid $1.5 million in total compensation, up 7 percent.
In Springfield, Baystate Health CEO Dr. Mark Keroack received about $1.5 million in 2015, an increase of 24 percent.
Hospitals set executive compensation by comparing themselves to similar organizations. “Massachusetts hospitals compete not only against each other for top leaders — they compete against peer organizations nationally,” the Massachusetts Health & Hospital Association said in a statement Tuesday. “Hospital CEOs face unique challenges, and their compensation reflects the unique skill set, education and experience required to meet the demands of the position.”
Dana-Farber Cancer Institute’s former chief executive, Dr. Edward J. Benz Jr., received about $1.6 million in 2015, a slight increase from the prior year. At Tufts Medical Center, chief executive Dr. Michael Wagner earned about $932,000 in total compensation, a decrease from the year before.