While Medicare's large payments to physicians have received lots of scrutiny recently, high pay for healthcare executives drew critical attention over the weekend.
In a May 17 news analysis examining the issue of executive salaries, the New York Times' Elisabeth Rosenthal reported that the base pay of health insurance and hospital executives often far exceeds doctors' salaries, according to an analysis done by Compdata Surveys.
The survey found an average salary of $584,000 for insurance CEOs, $386,000 for hospital CEOs, and $237,000 for hospital administrators, compared with $306,000 for surgeons and $185,000 for “general doctors.”
And the figures for executives did not include often-large non-salary compensation, such as a $21.7 million retirement package in 2012 for former Barnabas Health president Ronald Del Mauro or the nearly $35 million in non-salary pay in 2012 for Aetna CEO Mark Bertolini.
Rosenthal, a physician-journalist who has written an eye-opening series of articles for the Times over the past year on why U.S. healthcare costs are so high, wrote that big executive salaries are part of the reason the U.S. healthcare system spends an estimated 20% to 30% on administrative costs, far higher than in other advanced countries.
“At large hospitals there are senior V.P.s, V.P.s of this, that and the other,” the Times quoted Cathy Schoen, a senior vice president at the Commonwealth Fund, as saying. “Each one of them is paid more than before, and more than in any other country.”
Rosenthal's article also points out something that anyone who pays even modest attention to the U.S. healthcare industry has noticed. There are specialized jobs and companies—brokers, consultants, detailers and suppliers of various products and services—that you never thought of before. That also contributes to high healthcare costs. You meet these nice, hard-working folks at conferences and cocktail parties and marvel at how many Americans make their living off some niche of the healthcare system.
Those folks, of course, include healthcare journalists like us.
Follow Harris Meyer on Twitter: @MHHmeyer
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