Orlando Hospital CEOs Are Non-Profiting Millionaires

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Orlando Hospital CEOs Are Non-Profiting MillionairesThe CEO of Orlando’s second largest hospital system resigned last week after a year of bad press for Orlando Health, Inc. ¬†Most of the controversy has centered around the slashing of jobs and pay for the primary asset of the hospital system: its staff of health care providers. But the hospital board’s “acceptance of resignation” (corporate-speak for firing), has nothing to do with the hospital’s troubled relations with its front line¬†workers. As the Orlando Business Journal was quick to report, this change of guard was about one thing: the hospital’s poor financial performance. So far this year, the eight hospital conglomerate is losing¬† $12.2 million on its operations. (However, according to the OBJ, the hospital corporation’s¬†investment income turns this red ink into a positive cash flow of 13.2 million dollars. Yes, you read that right: during the first three quarters this health care conglomerate generated $25 million¬†from its capital assets!)

Of all the news reports of this development, only the Orlando Sentinel commented on the resigning CEO’s compensation, which came to¬†about $1.2 million for last year. ¬†(We will have to wait and see what kind of golden parachute and send-off compensation awaits the departing chief executive for this year).¬† So here we have a hospital corporation, organized as a non-profit and struggling with its financial standing, compensating its CEO as a millionaire.

Actually, this is not news at all. During 2010, OHI paid its CEO John Hillenmeyer twice that amount. Florida Hospital, another so-called non-profit, bested that by paying its CEO $2.93 million. According Becker’s Hospital Review, during¬†2010,¬†the CEO’s of these two Orlando hospitals ranked in the top ten of the highest grossing non-profit hospitals in the United States. For that year, the median total compensation of non-profit hospital CEO’s stood at $3.83 million. And the trend is toward even higher levels of compensation: during 2011,¬†median total pay for the top 25 highest paid chief executives climbed 12% while base salaries grew 3% year over year,¬†according to Modern Healthcare’s analysis of recent public information available on not-for-profit compensation.¬† According to that report, one of the arguments for this level of compensation is that these so-called non-profits have to compete for talent with the for-profit hospital corporations, where the¬†average¬†CEO compensation for the 12 largest for-profit hospitals stands at a whopping $14 million (that figures excludes stock options).

So OHI is on the hunt for its next millionaire CEO. ¬†You can expect he or she will do better than the last one.¬† The workers at the hospital who will be taking care of you or your family? Not so much…

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