When Ascension announced the first iteration of an ongoing reorganization, it included a cut to the not-for-profit health system’s executive pay.
In a March 2018 video to the organization’s employees, outgoing CEO Anthony Tersigni outlined a range of changes as the $23 billion Catholic health system shifts from its acute-care focus, including a reduction in Tersigni’s salary as well as all of those who report to him.
“In response to the challenges we face together that directly impact our associates across our national health ministry, I, together with other members of the Ascension office of the president—which are all of the leaders who report directly to me—have taken a reduction in our salaries,” he said in the video.
Ascension’s move was rare. Only under extreme circumstances, typically dire financial straits, do top healthcare executives take pay cuts, executive compensation experts said. Executive pay is one of the last levers pulled as providers reduce costs, arguing that systemwide strategies make a bigger dent. Recruitment and retention strategies almost always trump compensation cuts.
Hence, the 25 highest-paid not-for-profit health system executives received a combined 33.2% increase in total compensation in 2017, as their compensation rose to $197.9 million from $148.6 million in 2016, Modern Healthcare found.
Total compensation includes base salary plus bonuses, other compensation, deferred pay and nontaxed earnings. It excludes reported deferred compensation rolled over from previous years.
That combined total increase masks huge raises at some systems. Bon Secours Mercy Health CEO John Starcher earned 223% more in 2017 than he did in 2016 while Providence St. Joseph Health CEO Dr. Rod Hochman received a 157% raise. Gregory Adams, executive vice president and group president of Kaiser Foundation Health Plan and Hospitals, took home 110% more in total compensation and Kaiser Chairman and CEO Bernard Tyson received a 74% raise. Some of the highest-paid executives took home salaries more than 400 times higher than one of their minimum-wage employees.