Hospital execs command sizable pay

Chief executives at Montana’s largest hospitals pulled down salaries and bonus payments ranging from $250,000 to $580,000 for 2009 — although most had relatively small or no increases in a year marked by a faltering state and national economy.

Still, chief executives at Montana hospitals continue to command sizable salaries, often at least $200,000 a year in smaller towns and usually $400,000 to $500,000 or more at large hospitals in the state’s major cities.

Top executives also aren’t the highest-paid people at Montana’s nonprofit hospitals. That honor usually goes to specialized physicians — top surgeons, radiologists, cancer specialists — many of whom in 2009 earned upwards of $500,000 a year, and as high as $1.2 million.

Hospitals officials say consumers shouldn’t be surprised by the cost of executive talent at the state’s hospitals.

Hospitals are large, complex businesses with multimillion-dollar budgets and many employees, they say, and must compete regionally or even nationally for good executives.

“Northwest Healthcare is a sophisticated, multifaceted enterprise that is the largest employer in the Flathead Valley,” says Tony Patterson, chief administrative officer at the Kalispell hospital. “We must attract and retain talented senior leadership, as well as excellent employees at all levels.”

The Lee Newspapers State Bureau examined executive pay for 2009 at the state’s nine largest hospitals in Billings, Missoula, Helena, Butte, Kalispell, Great Falls and Bozeman, as well as at some of Montana’s mid-sized hospitals in smaller cities. The year is the most recent for which complete data are available.

Here’s a quick look at the highlights:

n The highest-paid hospital CEO in Montana is Nick Wolter at Billings Clinic, earning $581,000 in salary and bonuses in 2009 — although John Goodnow at Benefis Hospital in Great Falls wasn’t far behind, at $579,000.

The total compensation for Velinda Stevens, chief executive officer of Northwest Healthcare, was $571,645.

Billings Clinic is by far the largest hospital in the state, with annual operating revenue of $461 million in 2009. It’s also more than a hospital, as it controls several clinics in Billings and neighboring towns and helps manage a half-dozen smaller hospitals in south-central Montana.

Benefis is the state’s third-largest hospital, with $274 million in operating revenue.

n Some CEOs received large bonuses or incentive payments for 2009 — Goodnow’s was $150,000 — while others, like Wolter, received none. Hospital officials say bonuses are paid based on the hospital achieving specific goals for the year.

For example, John Solheim, the CEO at St. Peter’s Hospital in Helena, took home a $255,000 bonus in 2008 for completing a substantial construction/expansion project. His bonus for 2009 was $69,000.

n Most CEOs received raises in their base salary for 2009, usually 2 percent to 3 percent, although their total compensation might have gone up or down from the previous year, depending on bonuses. Most hospitals said they also gave their executives slight raises in 2010.

n Salary and bonuses aren’t the only compensation for top executives at major hospitals. Most also received payments to their retirement account, health and life insurance, cash payments for unused vacation and deferred compensation, which is pay that’s redeemed later after they’ve been at the hospital a set amount of years.

Deferred compensation payments can be sizable. Goodnow had $216,000 in 2009; Wolter $184,000.

n The lowest chief executive salary at a Montana hospital in a major city for 2009 was $249,000, for Chuck Wright at St. James Healthcare in Butte. It’s also the smallest major hospital in Montana, with $84 million in operating revenue in 2009. Wright joined the hospital in 2009.

n Salaries for chief executives at mid-sized hospitals, such as those in Anaconda, Hamilton, Glendive, Sidney, Whitefish and Lewistown, tend to hover around $200,000 a year, although some are higher. For example, CEO David Henry at Northern Montana Hospital in Havre — the state’s 10th largest hospital, with $53 million in operating revenue in 2009 — took home $354,000 in salary and bonuses that year.

Jason Spring, CEO of North Valley Hospital in Whitefish, had total compensation of $246,001.

n Larger hospitals usually have several upper-level executives who aren’t the CEO but still get considerable six-figure salaries, as well as the opportunity for bonuses or incentive payments.

Hospital officials say they use independent consultants to help their boards determine executive pay and bonuses, and often choose salaries considered in the midrange for the region.

Tiffany Garcia, spokeswoman for St. Vincent Healthcare in Billings, says the Catholic health system that controls the hospital has a policy to “pay competitively at the middle of the market.”

“Our board approves the compensation with the intent of recruiting and retaining the very best leadership through a fair, rigorous process with third-party affirmation,” adds Jim Duncan, spokesman for Billings Clinic.

At most large Montana hospitals, the current CEOs have been there for many years, although turnover is not uncommon, either — particularly for hospitals that are part of a larger health organization/hospital chain, like St. Vincent in Billings or St. Patrick Hospital in Missoula.

In Great Falls, for example, Benefis CEO Goodnow has turned down a number of recruitment efforts since joining the hospital in 2002 — so the incentives and deferred compensation are doing their job, says hospital spokeswoman Karen Ogden.

C.J. Bolster, national director for health care for The Hay Group, an Atlanta-based consulting firm that advises hospitals on salaries and recruiting, says hospital boards in Montana and elsewhere set salaries that they feel can help them recruit and retain the best talent possible for their size of hospital.

“They ask the questions, ‘Where are we going to recruit from, or where are we going to lose to?’” he says. “Even in Montana, there’s still a national search. ... By and large, they are pretty much tied to the bulk of the national trends.”

(c) 2011 the Independent Record

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