Last year was a financially rewarding one for the Joint Commission on Accreditation of Healthcare Organizations and its growing list of senior executives.
Like the American Hospital Association, top dogs at the Oakbrook Terrace, Ill.-based healthcare accrediting agency enjoyed healthy increases in compensation.
But unlike their counterparts at the AHA, which is shrinking, the senior executives at the JCAHO are overseeing a growing operation.
Last year, annual revenues at the Joint Commission topped $100 million for the first time, more than 35% higher than the annual revenues at the AHA (See chart, p. 2). The number of full-time-equivalent employees rose to 736 last year from 697 in 1996.
Aggregate compensation for officers and directors at the JCAHO soared 25% in 1997 to $3.7 million. That follows a 27% jump in 1996 to $3 million.
As recently as 1995, compensation for top managers and directors was just $2.3 million.
Financially, it was a good year for the JCAHO. It ended the 1997 tax year with a modest but healthy $2.7 million profit. That was a dip from $4.3 million in 1996, even though revenues grew more than 6% last year.
The JCAHO posted its highest profit-$5.2 million-in 1993.
In 1997, the accrediting agency had $102.4 million in total revenues, compared with $96.2 million in 1996.
The figures are contained in the Joint Commission's annual tax filing with the Internal Revenue Service. The JCAHO filed it May 14. MODERN HEALTHCARE reviewed a copy last week.
The Joint Commission said the executive compensation increased because more names have been included among the officers and directors.
"There are four additional officers reflected in 1997. That makes up the largest portion of the increase," said Janet McIntyre, JCAHO spokeswoman. Those executives were named vice presidents because of the nature and importance of their work, she said. "Also, you have one officer from 1996 who was only there for half a year. So 1997 reflects the full salary. Between those two, that represents the bulk of the increase," she added.
The 1997 tax filing lists 18 officers and directors who were paid full salaries. Their total compensation averaged $208,275.
In 1996 there were 15 officers and directors listed with salaries. Their compensation averaged $199,780.
Dennis O'Leary, M.D., the Joint Commission's president and chief executive officer, earned $418,191 in 1997, up from $390,123 in 1996, a 7% gain. The other highest-paid officers were Executive Vice President Alfred Buck, M.D., at $267,250; Executive Vice President Karen Timmons, at $262,417; Executive Vice President Charles Bair, at $252,992; and Senior Vice President Paul Schyve, M.D., at $252,261.
Total compensation for nonexecutives was $40.7 million last year, up slightly from $40.4 million in 1996.
The main reason retained earnings declined despite the $6.1 million revenue gain is that expenses surged $7.7 million, to $99.7 million. Legal fees, for example, jumped 188%, to $375,000.
The Joint Commission conducted 9,296 accreditation surveys in 1997, compared with 8,278 in 1996. It conducted 527 education programs last year, compared with 471 in 1996.