Becker's Hospital Review

11 CFO / FINANCE North Carolina health systems defend executive pay in wake of treasurer's report By Kelly Gooch N onprofit hospital systems are defending the pay their executives receive aer a report released by North Carolina Treasurer Dale Folwell on Feb. 15 found that the systems paid top executives more than $1.75 billion in the past decade, doubling CEO paychecks in less than five years. e report is based on research from the North Carolina State Health Plan for Teachers and State Employees, Baltimore-based Johns Hopkins University Bloomberg School of Public Health, and Rice University's Baker Institute for Public Policy in Houston. Researchers studied executive compensation across North Carolina's nine largest hospital systems, including Charlotte-based Atrium Health, Asheville-based Mission Health, Charlotte-based Novant Health, Chapel Hill-based UNC Health, Greenville-based Vidant Health, Durham-based Duke University Health System, Greensboro- based Cone Health, Raleigh-based WakeMed and Winston-Salem- based Wake Forest Baptist Health, as well as the Midwest system Advocate Aurora Health that merged with Atrium Health. Mr. Folwell highlighted various findings from the data analysis, which he said showed that "executives enriched themselves while fueling a crisis of healthcare affordability in North Carolina." According to a news release from his office, the findings include that: e hospital systems paid executives more than $1.75 billion from 2010 to 2021. About 20 percent of that compensation from 2010 to 2021 was captured by a handful of hospital CEOs, who collectively received $308.8 million over 12 years. Across North Carolina's largest nonprofit systems, the average CEO compensation was $3.4 million in 2020. Out of 175 executives across eight systems, 35 executives took pay reductions in 2020 that were not spurred by departures. Mr. Folwell noted that researchers could not analyze UNC Health's systemwide data and relied on partial overlapping data from UNC REX Hospital. He also noted that the report does not account for compensation hospital CEOs can draw from outside organizations. "is is the biggest transfer of wealth in our generation, and it's being financed disproportionately on the backs of sick, low- and fixed- income people," Mr. Folwell said in the release. "ese nonprofit hospital executives have lost their mission. ey are supposed to make people better, not make themselves richer." Atrium Health, Cone Health and the North Carolina Healthcare Association — on behalf of health systems named in the report — took issue with the treasurer's report, each sharing statements with Becker's. Atrium Health said in its statement that it is "important to note that as prescribed by the Internal Revenue Service, our governing board determines the compensation of our executives based upon independent, expert advice and national data on organizations of similar size, scope and complexity. Illinois hospital closes By Kelly Gooch and Andrew Cass S t. Margaret's Health-Peru (Ill.) closed Jan. 28 after the system's CEO and chair of the board detailed plans Jan. 20 to temporarily shutter the hospital, Shaw Local News Network reported Jan. 28. Nurses from the OB-GYN department left their final shift with signs made in protest of the closure, according to the report. One sign read "C.E.O = CUT EVERYONE OUT." Most employees said they heard about the closure announcement either through Facebook or local media. The system's plan is to reopen the hospital once a rural emergency hospital designation is finalized, but the hospital will need to reopen before it can qualify, according to the report. St. Margaret's Spring Valley, Ill., location will remain open. The closure occurred after the hospital's contract with the provider of emergency room physician coverage ended. This temporary closure includes acute hospital services such as the emergency room, intensive care unit, med- surg/peds, all surgeries, emergency, lab, X-ray and other outpatient hospital services. Leading up to the closure, the hospital apologized for how the news was announced. "Please know the true essence of St. Margaret's Health has always been, and still is, our employees and the citizens of the communities we serve. They are the most important assets we have, and without them, we cannot achieve our mission," the hospital wrote in a message posted on Facebook the afternoon of Jan. 26. "As such, we would like to apologize to our employees and the community for not delivering our announcement in the best way possible. It was never our intent to blindside any of our employees or the community with such a sensitive and life-impacting announcement. As we move forward, we are working to improve our communication (to both our internal employees and the community alike)." The hospital cited various contributing factors involved in the move. These include financial and economic circumstances affecting the entire healthcare industry, as well as a recent cyberattack, which the hospital said prevented it from being able to bill or get paid in a timely way. St. Margaret's Health-Peru also cited severe staff shortages. n

• Cover