As the governor and top lawmakers inch toward a budget deal, a restructured hospital tax stands as a cornerstone everyone wants.
The hospitals would end up paying less than they paid in the last few years and the state would get more money, all thanks to the miracle of higher Medicaid reimbursements. This seems like an obvious answer, if it works. What took so long?
Partly it was acrimony over executive pay at the 27 private, acute care hospitals, which rankled Democrats — especially Gov. Dannel P. Malloy. Seeing a rising number of hospital administrators making seven-figure salaries, they wanted to take more money from hospitals, saying the rising pay was proof of the institutions’ ability to pay.
In recent weeks, with a deal pending, Malloy and his budget chief, Ben Barnes, have toned down their barbs about hospital administrators’ salaries.
Who’s making the big money that caused such a row? At least 29 Connecticut hospital executives made $1 million or more in the fiscal year that ended Sept. 30, 2016, not including doctors who exceeded that benchmark for their medical work.
The sprawling Yale New Haven Health Services Corp., by far the state’s largest hospital system, is the place to look. In fiscal 2016, Yale New Haven accounted for at least 16 of the top earners, more than all other hospitals in Connecticut combined.
The top earner, according to filings with the state Office of Health Care Access, was Marna Borgstrom, CEO of the Yale system, which includes Yale New Haven, Bridgeport, Greenwich and, as of last September, Lawrence + Memorial in New London. Borgstrom’s total: $3.85 million.
The number of administrators making $1 million-plus (including pay and benefits) at the state’s seven multihospital systems and nine independent hospitals might be higher than the listed 29. That’s because at the Yale parent system, the lowest of the 10 listed administrators made $1.2 million last year, and there could be more over $1 million.
Regardless, the listed number is up from 26 the prior year, and compares with 16 in 2010. That year, the biggest earner, the then-president of Greenwich Hospital, made $5.2 million as a result of a deferred retirement payment.
Hartford HealthCare, the second largest state system, including Hartford Hospital and four others, had four executives who pulled in at least $1 million, led by Elliot Joseph, the HHC system CEO, at $2.66 million. That made him the state’s third-highest paid executive in the fiscal year that ended Sept. 30.
St. Francis Hospital and Medical Center and its parent, the national Catholic chain Trinity Health, had three executives making at least $1 million in fiscal 2016, led by Christopher Dadlez, CEO of Trinity Health New England, $1.8 million.
Other system or independent hospital CEOs topping the threshold number in 2016 were Peter Karl at Eastern Connecticut Health Network, who later resigned, $2.3 million; Brian Grissler, Stamford, $2.1 million; Stuart Marcus, St. Vincent’s in Bridgeport, $1.6 million; John Murphy, M.D. at Western Connecticut Hospital Network, $1.5 million; and Vincent Capece, Middlesex, $1.35 million.
All of the institutions except Sharon Hospital were nonprofits last year; Sharon is now a nonprofit, after converting this summer. Most are claiming ever-tightening finances in part because of the state tax. In fiscal 2016, the hospitals paid $438 million after state reimbursements — larger than the combined total of their surpluses — in a tax that’s based on total revenues, rather than how well the hospitals are doing financially.
Some hospitals operate with large surpluses, while others are in a constant state of struggle. Many have had layoffs and several have joined larger groups to survive. The current deal would have the hospitals paying a net $229 million this year.
The hospitals and their trade group say their executives run some of the most complex, highly regulated organizations, where a life is on the line every time a patient arrives. They say they account for 200,000 jobs and $26 billion in economic activity, and must pay what they pay to attract the right people.
“Especially during these difficult economic times, our hospitals need the very best and brightest leadership to help navigate this complex and challenging healthcare environment. We’re very proud to have some of the best hospital executives in the country to ensure the safety net is here when people need it most,” Michele Sharp, spokeswoman for the Connecticut Hospital Association, said in a written statement.
A look at hospital CEO pay across the country shows wildly different levels, with Connecticut’s chiefs generally in line. It’s harder to compare vice presidents because lists aren’t available publicly and jobs vary.
Yale’s list of executives who were paid more than $1 million in 2016 included the presidents of the respective hospitals; the senior vice presidents for operations at the cancer hospital and the children’s hospital at Yale New Haven; and several executive vice presidents, senior vice presidents and vice presidents in areas such as medical affairs, finance, law and staffing.
Many of the Yale New Haven Health Services Corp. executives also hold jobs at individual hospitals — double-duty that’s not common at very large hospital systems, according to Vincent Petrini, senior vice president for public affairs. Petrini said the board of the $4 billion-plus-per-year corporation uses a pay consultant to compare salaries with those of peer systems, including some of the most prestigious hospital systems in the nation.
For two of the Yale top earners, 2016 pay reflects one-time vesting of deferred pay over long careers, Petrini said. Those payments were not necessarily made in cash in 2016. One recipient was William Gedge, senior vice president for payer relations, whose listed total of $3.14 million included a deferred vesting — and made him the second-highest paid Connecticut hospital executive of the year, on paper at least.