Time To Cut Health Care Costs At The Top

Blog#231- 1/28/25

TIME TO CUT HEALTH CARE COSTS AT THE TOP
By
Richard Davis

A group of lawmakers has finally decided to tackle the issue of obscenely high salaries paid to hospital CEO’s and administrative leadership in Vermont. Every time this issue has come up hospital spokespeople hide behind the mantra that they have to pay high salaries to attract qualified candidates. That may be true, but we are living in Vermont, not New York or Boston, and I think we can still attract excellent candidates without having to lure them in with salaries that could pay for three or four front line health care providers.

The purpose of the recently drafted bill states, “This bill proposes to require hospitals to provide information about employee compensation and administrative staffing ratios to the Green Mountain Care Board as part of the Board’s hospital budget review process. It would also direct the Board to ensure that the ratio of administrative employees at each hospital to employees delivering health care services directly to patients is aligned with national averages for similar hospitals and that the compensation for a hospital’s executive and clinic leadership does not equal more than 10 times that of the hospital’s lowest-paid employees who deliver health care services directly to hospital patients.”

This rationale is on target and long overdue. I suspect the bill will meet a lot of opposition, especially from the Vermont Association of Hospitals and Health Systems (VAHHS), the lobbying arm of Vermont’s hospital industry. When I worked at Brattleboro Memorial Hospital(BMH) it always bothered me to know that the CEO was making more money in a month than someone making $30,000 a year. If you want an example of how inequality is created in this country look no further than your local hospital.

All Vermont hospitals are non-profit institutions. That means they don’t have shareholders, but they are still run like for-profit businesses and most of the perverse incentives of American business also apply to non-profit hospitals.

There is one benefit of having hospitals be non-profit and that is that their IRS 990 forms are public documents. The ones you can find online through such web sites as Guidestar and Pro Publica are a few years behind but they still give you a clear picture of hospital finances. One of the most revealing parts of the 990’s is a list of the highest paid employees.

I have extracted information from 990’s for Brattleboro Memorial Hospital, one of Vermont’s smallest and UVM Medical Center, Vermont’s largest. The BMH information is from their 2022 990 filing. The salaries and benefits for six administrators totals over $1.3 million. This number is a mixture of partial years for the old and new CEO as well as older CFO’s. The current CEO made $258,435 in salary and benefits for a partial year and the outgoing CEO earned $178,970. It as also worth noting that two orthopedic surgeons made $870,000 and $670,000 in salary and benefits.

The University of Vermont Medical Center has a top heavy administration with a CEO, a president and a variety of chiefs of departments all making over $500,000 in salaries and benefits. The CEO made $1.85 million in salary and benefits and the president made over $900,000.

I urge people to make the effort to get a copy of the 990’s and see where a big chunk of your health care dollars are going. These people are the 1% Bernie Sanders has been railing about for years and they are the poster children for American financial inequality.

https://www.guidestar.org/

https://projects.propublica.org/nonprofits/organizations/142007220/201832369349300743/IRS990