NC Nonprofit Hospital Execs Made Over $1.75B Since 2010, Report Shows – “‘We’re seeing a massive transfer of wealth from workers to hospital executives,’” Folwell said during a press briefing Wednesday morning.”
Most board members at the nation’s top hospitals have no healthcare background – “Among the 529 board members, 44 percent had a background in finance.”
What it Means for You – 3-minute read
Remember the 990 season?
It was a fleeting, annual event when the leadership of not-for-profit health systems endured a rare moment of personal exposure with the filing of IRS Form 990. In that document the financial performance of their organization – along with their own personal compensation – would be trotted out onto a very public stage. And often, necessitating your deft explanation.
Every year, on schedule, this spotlight would come and go with a few questions and, maybe, a bit of consternation in its wake. But now, the spotlight’s staying put and shining brighter on your leadership team and your board.
Who’s leading these not-for-profit organizations? How much do they make? Who is on the board and are they the right leaders?
All fair questions, of course, but the passionate undercurrents in some recent examinations add another keen scalpel to the sharp scrutiny of not-for-profit health systems you’ve been viscerally feeling over the last year or so.
You know the topics: How do you handle your money, treat your employees and care for (and invest in) your communities? 340B, anybody? Billings and collections? Price transparency? Fulfilling your tax-exempt status?
Add these to the list. In the last couple of weeks, we’ve seen two different-but-related takes from outside organizations asking pointed questions. These aren’t about the performance of not-for-profit health systems, but about who’s leading them and how much that leadership is worth. Let’s review.
In North Carolina, the state treasurer released a withering look at CEO compensation for some of the major health systems in the state and consequently accused hospital CEOs of having “lost their mission.”
The report also quoted an economist who co-authored the study, who said, “Executives are being handsomely rewarded for earning high profits and burdening North Carolinians with medical debt, rather than guaranteeing affordable care to hard-working families that form the backbone of the economy.”
This point of view is a troubling through-line with other recent coverage critical of provider organizations. And it shows that the narrative has taken hold to the extent that political leaders feel politically safe adding to the chorus.
In response, the North Carolina Healthcare Association called the accusations and implications egregious, pointing out that the report didn’t take into consideration the immense complexity of the healthcare system, the challenges that creates for health system leadership and the need for agility, innovation and decisiveness in the midst of it all.
Health System Boards
Meanwhile, a group of physician researchers published a brief look into the “Professional Backgrounds of Board Members at Top-Ranked US Hospitals (paywall) that was covered by Becker’s. Among the 15 of 20 hospitals with complete information available, 44 percent of board members come from the financial industry, while just under 15 percent are healthcare professionals.
The implication? That provider organizations are more focused on making money than delivering care.
The assumption? Having more clinicians on the board inherently means better care. Yes, clinical voices are essential to a board. And so is diversity in background, perspective, experience, expertise and demographics. (See our editorial written with Michael Peregrine of McDermott Will & Emery where we unpack this further.)
So, with that, here are a few more takes that bring together both storylines:
Check reality. Consider again the assumption running through these examinations about what not-for-profit healthcare should be and how it should act. In reality, those assumptions are coldcocked, first, by the byzantine brokenness of the US healthcare system and, second, by how hospitals are forced to Rube-Goldberg their operations for sustainability.
Getting a glimpse into how healthcare in America “really works” can be record-scratch moment to lay people, who may equate not-for-profit healthcare with financially blind, mission-minded charity care and not to the multi-million or -billion dollar enterprise that it is. Yet, for better or worse, money is a critical tool to sustain care.
That means the imperative is to communicate the broader story – for you as a system and us as an industry – about the role of money in healthcare. If we fail to do so, we’ll be overwhelmed by expectations we will never meet.
Do: Get ready. Your board is a story and has a story. Who they are. What they bring to the table. How they reflect and contribute to your mission. And, if your board is not who you want it to be today, evolve it. Discuss how you are maintaining or moving toward much-needed diversity – in background, experience, gender, race/ethnicity, perspective? Do the same with regard to your leadership team, including their pay. It can be uncomfortable to talk about compensation, but you do hard things. Be ready for the call.
Then, activate your board. They are prominent and respected members of the community – and that carries weight. Prepare and encourage them to tell the story of your organization, and their role in it.
Don’t: Get numb. You’re tired of reading yet another round of stories taking not-for-profit healthcare to the woodshed. We’re tired of writing about it, too. But there is a powerful story to tell, uniquely in the markets where you care and serve and, together, as an industry across the country. Today’s work is to anticipate the examination so you can prep and ace the test – not just in terms of communicating about how you fulfill your mission, but the day-to-day systems and operations that contribute the practical, measurable fulfillment of it.
Read more: Industry guru Paul Keckley unpacks the study and accompanying commentary in his latest piece.