Hospital CEO salaries are more than optics

Elizabeth Nabel, CEO of Brigham and Women's Health Care.Timothy Tai/for the Boston Globe/file

The economics of health care aren’t working for the poor and disabled.

But somehow, they work just fine for hospital CEOs.

As the Globe’s Robert Weisman recently reported, pay increases for top Massachusetts hospital CEOs outpaced the growth of state health spending, according to the most recent filings of compensation data by nonprofits with the IRS.

In 2014, for example, Elizabeth G. Nabel, president of Brigham and Women’s Hospital in Boston, earned $5.4 million, up 119 percent from her $2.3 million pay package in 2013. The report attributed most of that increase to a jump in deferred compensation when Nabel vested in a retirement plan managed by Partners HealthCare, the corporate partner of Brigham and Women’s. Nabel also advises the National Football League for an undisclosed amount of money.

Partners also reported a 19 percent increase in total compensation, to $3.1 million, for Gary L. Gottlieb, during his last year as CEO of Partners before leaving to head Partners In Health. Peter Slavin, president of Massachusetts General Hospital, earned $2.1 million, down 6 percent.

Pressed no doubt to stay competitive, other hospital systems also reported major salary hikes: Total compensation rose 29 percent, to $2.2 million, for Howard R. Grant, president of Lahey Health system in Burlington; 7.1 percent, to $1.5 million, for Kevin Tabb, president of Beth Israel Deaconess Medical Center in Boston; 7.6 percent, to $1.4 million, for Kathleen E. Walsh, president of Boston Medical Center; and 70 percent, to $1 million, for Michael Wagner, president of Tufts Medical Center in Boston. Wagner spent much of 2013 heading the Tufts physician organization.

Sure, the job of running a hospital today is tough. But even as these CEOs are richly rewarded for their hard work, the health care budget for the most vulnerable citizens of Massachusetts is coming under tough scrutiny.

According to another Globe report, Medicaid, which covers the poor and disabled, now accounts for more than one-third of state spending. Given the increase in Medicaid spending, and the drop in state revenue, that formula is “unsustainable,” budget analysts told the Globe. Meanwhile, as reported by the Globe’s Spotlight Team, the state is closing mental health facilities because there’s not enough money to fund them.

On one hand, these high CEO salaries can be dismissed as optics. Executive compensation accounts for a small piece of the health care pie, which is getting harder than ever to downsize. The combination of new technology, including drugs, increased labor costs, and a greying population, “makes it very tough to reduce costs dramatically without rationing care,” said Philip W. Johnston, a former secretary of human services under Governor Michael Dukakis who now runs a consulting firm that specializes in health care policy.

“Rationing” is another way of saying health care for the poor must be modified and reduced because it costs too much. Yet there is still enough money to pay multimillion dollar salaries to those executives in charge of managing the health care system. So optics do matter, especially when the country is talking about pushing out the Medicare age and standing by as people with mental illness are being shut out of care.

The economic imbalance between the haves and have-nots in American society is growing worse. Are we going to accept that as inevitable on the health care front, too?

As Dr. Stuart Altman, chairman of the state’s independent Health Policy Commission, which monitors cost, told the Globe, the state’s decision to spend so much money on the poor and disabled is a moral choice. Up to now, Massachusetts has been willing to pay it.

If Massachusetts makes a different choice, it represents a clear shift in philosophy and priorities. As gatekeepers, these highly paid hospital CEOs should stand firmly behind their responsibility to the poor rather than stand by as the health care provider system fractures beneath them.