Hospital executives often come under scrutiny for the salaries and benefits they receive. According to a recent IRS survey related to chief executive officer salaries, of more than 500 hospitals, the national average income was $490,000. In addition, the salaries of hospital and other health industry executives have come under scrutiny in Congress. For-profit hospitals, which make up about 30% of hospitals, do not have to publicly disclose how much the executives at each facility earn, but nonprofit hospitals must provide that information on the IRS form 990, which are public documents. By law, hospitals are required to show that such compensation is “reasonable” when compared to pay at other similar institutions. If you were a board member of a healthcare organization, what other determinants besides the salary of other chief executives would you want information on before you determined the compensation of the chief executive of the health care organization whose board you are on? In addition, how do the responsibilities of chief executives compare to the responsibilities of other healthcare employees? Do these responsibilities warrant a substantially higher salary? Defend your answer.
