New Hampshire AG Reviews CEO Salaries at Nonprofit Hospitals

Elyas Bakhtiari, June 15, 2010

Executives at nonprofit hospitals in New Hampshire are defending their compensation packages after the state Attorney General announced a plan to review hospital CEO salaries in the state.

Attorney General Michael Delaney called attention to executive compensation last month as he announced that his office would reject the planned acquisition of Catholic Medical Center in Manchester by Dartmouth-Hitchcock Health. His report noted that Catholic Medical Center President-CEO Alyson Pitman-Giles received a significantly larger compensation package than her peers and promised a follow-up investigation of hospital CEO compensation across the state.

"The reasonableness of the compensation paid to Ms. Pitman-Giles is an area of significant concern to the Attorney General," Delaney said in his report.

Although Pitman-Giles pulled in a total of $1.36 million in 2009, most CEOs of nonprofit hospitals in New Hampshire have compensation packages in the mid-six figures. The New Hampshire Hospital Association says the state's nonprofit hospitals aren't worried about the investigation and are eager to comply.

"The New Hampshire Attorney General certainly can do an investigation and we welcome his review. There is nothing to hide. The hospitals are willing to comply with any kind of request," says Kathy Bizarro, executive vice president of the New Hampshire Hospital Association.

Because of their tax-exempt status, nonprofit hospitals are no strangers to criticism about executive compensation. Senator Chuck Grassley criticized compensation levels fiercely last year after an IRS report found that compensation at nonprofit hospitals averaged nearly $500,000 a year. Although Grassley's focus on CEO compensation faded as the healthcare reform debate intensified, the Patient Protection and Affordable Care Act did include new requirements for tax-exempt hospitals related to community benefit and providing care without considering financial eligibility.

Compensation numbers from 2009 take on particular significance because of the faltering economy and the financial struggles of some hospitals. Some executives lost money as their hospitals struggled. The CEO of Exeter Hospital, for instance, saw his earnings drop roughly $40,000 last year as the hospital lost $944,800 during the period, according to the New Hampshire Union Leader.

The NH Attorney General's Office has said that it will not directly ask CEOs to take a pay cut if it finds that compensation is excessive, but will instead contact the boards of directors and inform them about the high pay levels.

For now, hospitals are just waiting to hear back about the investigation, says Bizarro.

Elyas Bakhtiari Elyas Bakhtiari is a freelance editor for HealthLeaders Media.
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