Posting CEO pay of non-profit hospitals part of proposed reform of health system

By David Pendered

Five CEOs are paid a total of more than $9 million a year to run non-profit hospitals in metro Atlanta, according to the hospitals’ latest available tax returns. These salaries, and other hospital financials, are to be made more readily available to the public as the part of a proposed effort by the state House to “revolutionize” health care delivery.

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A Georgia House council has called for a ‘revolution’ in the state’s health care delivery model. Legislation is expected to be introduced within the coming weeks. Credit: clipartbest.com

Lawmakers haven’t raised specific concerns about executive compensation at non-profit hospitals in metro Atlanta and across the state. At least, not in the report presented last month by the House Rural Development Council.

However, some discussion before the Jan. 14 start of the legislative session did focus on the level of CEO salaries paid by non-profit hospitals for the main organization and related organizations. The following salary figures are displayed on tax returns posted by guidestar.org, a non-profit tracker of non-profit organizations:

  • Children’s Healthcare of Atlanta Group Return: Donna Hyland (2016 tax year), $1.8 million;
  • Gwinnett Health System, Inc. (2016 tax year): Philip Wolfe, $1.1 million;
  • Northside Hospital, Inc. (2016 tax year): Robert Quattrocchi, $3.2 million;
  • Piedmont Hospital, Inc. (2015 tax year): Kevin Brown, $2.2 million;
  • Wellstar Atlanta Medical Center (2015 tax year): Candice Saunders: $1.3 million.

The most recent 990 tax form posted on guidestar.org in regards to Emory Healthcare, Inc., Emory’s operating entity for its medical facilities, is for the 2009 tax year.

Health care was one of four topics considered by the House Rural Development Council. The council was co-chaired by two of the chamber’s more influential members, meaning they have the trust – and ear – of House Speaker David Ralston (R-Blue Ridge). Legislation related to the council’s recommendations is expected to be filed shortly, perhaps soon after Super Bowl LIII on Feb. 3.

Both of the council co-chairmen also serve as chair of major committees – Rep. Terry England (R-Auburn), chair of the Appropriations Committee; and Rep. Jay Powell (R-Camilla), chair of the Rules Committee.

The segment of the council’s report on health includes an observation on a perceived lack of transparency in the state’s hospital accreditation process. The process requires the state to authorize a document known as a certificate of need before an entity may build or expand hospitals, nursing homes, and/or make major purchases such as MRIs and CT scanners. The stated purpose of a state law last updated in 2008 is to reduce duplication of services and investments. The report observed:

  • “The current system for health care delivery must be revolutionized to provide the level of access, quality and cost controls that support better health outcomes for Georgians.”
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The CEO at Northside Hospital may be the highest paid CEO at non-profits in metro Atlanta. A proposed reform effort in the state House may require non-profit hospital in Georgia to post executive compensation on their websites. Credit: newcomb-boyd.com

The report continues:

  • “In addition, there is a lack of transparency for financial and community standards of care that must be addressed to promote equitable competition and ensure that tax dollars, tax credits, and tax exemptions are being used appropriately to subsidize care being delivered in non-profit hospitals.”

The council calls for executive salaries to be posted on the website of each non-profit hospital in Georgia:

  • “Non-profit hospitals shall post on their main website the total salaries and compensation packages for executive leadership positions.”

This information is to be part of a broader financial disclosure call for by the council. This additional disclosure is to consist of posting each hospital’s federal tax return on its own website, and also on the website of the Georgia Department of Community Health. This disclosure would eliminate the need for Georgians to use a source such at guidestar.org, which was founded in 1994 to provide prospective donors with financial information about non-profits by disclosing their 990 tax returns as filed with the Internal Revenue Service.

DCH is the state’s lead agency for Medicaid and has a mission to, “provide Georgians with access to affordable, quality health care through effective planning, purchasing and oversight.” According to the council’s proposal

  • “To ensure commensurate and consistent reporting between hospitals, the hospital and the Department of Community Health shall utilize the most recent and already required and audited federal form 990 and federal form 990 Schedule H for each hospital. This shall be readily available and prominently displayed on each local hospital’s main web page as well as the Department’s. From July 1, 2019 forward, these reports shall be posted annually and shall remain posted in subsequent years.”

 

 

David Pendered, Managing Editor, is an Atlanta journalist with more than 30 years experience reporting on the region’s urban affairs, from Atlanta City Hall to the state Capitol. Since 2008, he has written for print and digital publications, and advised on media and governmental affairs. Previously, he spent more than 26 years with The Atlanta Journal-Constitution and won awards for his coverage of schools and urban development. David graduated from North Carolina State University and was a Western Knight Center Fellow. David was born in Pennsylvania, grew up in North Carolina and is married to a fifth-generation Atlantan.

1 reply
  1. Avatar
    Craig Pendergrast says:

    Not only are the “non-profit” hospitals (except Grady’s) executive compensation numbers too high, it is important to understand that these metro area hospitals aren’t close to being non-profitable. Instead, these metro area hospital systems (again, except for Grady) make huge profits each year, generally over $200,000,000 each as per their Form 990s. That is after taking into account their “under-reimbursement” from Medicaid, write-offs for non-payments by patients, and insurance payment “discounts” from the hospitals’ ridiculous rack rates. This is also after taking into account the hospital systems’ “community benefit” program costs and grants. One hospital system executive told me that they don’t really think of themselves as a non-profit. Instead, they think of themselves as tax-exempt. They don’t pay state or federal income tax on these huge profits; they don’t pay income tax on the earnings from their endowments/investments; they don’t pay property taxes on their hospital properties. So, they don’t help pay for the public costs of roads, traffic, public safety, etc. that other businesses pay.

    Let’s think about some things that the state legislature and the profitable hospital systems could do:

    1. Get the profitable hospital systems pay 6% state income tax on their net income, just like other businesses in the state.
    2. Use that tax money to help the rural hospital systems that are struggling and to help the working poor afford medical insurance.
    3. Get the profitable hospital systems to make more grants for public health purposes, including stronger financial support of community health centers in rural/poorer areas. These grants could be calculated on a system-by-system basis at a certain percentage of their pre-grant net income to make up for and provide a reasonable public-benefit quid pro quo in return for the 21% federal corporate income tax on net income that these profitable hospital systems avoid under federal law. Let’s say that in return for avoiding the 21% federal corporate income tax, a hospital system with a $200,000,000 net profit granted 10% of that profit to others for public health purposes. That would be $20 million per year. Multiply that times four assuming that each of the Piedmont, Northside, Children’s Healthcare, and Wellstar systems makes that level of operating profit each year (before taking into account their investment earnings) and you are talking $80 million in public health-related grants each year. That could make a big difference.
    4. Get the profitable health systems to pay property taxes to local government.Report

    Reply

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