Factors other than bed size are responsible for wide disparities in hospital executive compensation, according to a follow-up report released last week by the General Accounting Office.
The GAO's first report on hospital compensation, released last December, documented big differences in executive salaries between hospitals of various sizes, but the report didn't delve extensively into other reasons for the discrepancies.
Both reports were requested by Rep. John Dingell (D-Mich.), chairman of the House Energy and Commerce Commit-Compensation
tee. The committee's oversight subcommittee has an ongoing probe of factors contributing to rising healthcare costs.
Both reports are based on compensation data from 429 hospitals surveyed by the GAO. They were asked to supply compensation data for top executives from 1989 to 1991.
The initial GAO report disclosed that chief executive officers' salaries in 1991 ranged from $31,000 to $849,000, with an average of about $131,000 (Dec. 13, 1993, p. 4). Salaries varied significantly by hospital bed size (See chart).
However, the follow-up report issued last week said the greatest factor in explaining the disparity in executive compensation is the financial performance of the institution, not hospital bed size.
For example, the GAO found that one unnamed urban hospital with an operating profit margin in the upper 25th percentile of the nation's hospitals paid its CEO nearly 5% more than a similarly sized hospital in the same area with an operating profit margin in the lower 25th percentile of the nation's hospitals.
Other factors linked to disparities in CEO compensation include the number of hospital competitors in a market and hospital patient volume, the GAO report said.-