A survey of nonprofit hospitals in the Puget Sound area found that 19 top executives and doctors earned more than $1 million in 2008. The CEO of Tacoma's MultiCare earned more than $5 million that year.
Public radio station KUOW in Seattle reported Monday that another 59 employees at the hospitals earned at least $500,000.
KUOW said it focused on 2008 because not all of the nonprofit groups have filed reports with the IRS for 2009. It looked at 16 hospital organizations with annual revenue of $250 million or more.
The CEOs at MultiCare Health System, Northwest Hospital, Providence Health and Services, and Virginia Mason Medical Center each made more than $2 million.
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Hospitals are complex enterprises, often with thousands of employees and billion-dollar budgets. Nonprofit organizations get tax breaks, but in return the IRS requires them to operate in the public interest, including paying only “reasonable” amounts to executives.
Hospitals often hire consultants to determine executive pay at comparable organizations. A hospital’s board of directors ultimately is responsible for executive compensation.
MultiCare Health System, which runs three hospitals in Tacoma and Good Samaritan Hospital in Puyallup, paid CEO Diane Cecchettini $2 million in 2009 and more than $5 million the year before.
“Her compensation, frankly, is well deserved because of her good work,” said Multi-Care Chairman John Folsom.
Cecchettini’s income spiked in 2008 when she received a $4 million payout of deferred executive benefits.
“Diane Cecchettini and any CEO of a major hospital organization deals with a very, very complex organization,” Folsom said. “The marketplace calls for that level of compensation just because of the difficulty and the need for high-level business skills.”
Eight Puget Sound-area hospital systems reported paying membership dues for some executives at clubs like the Columbia Tower Club and Kitsap Golf and Country Club.
Providence and MultiCare also send their leaders, and their spouses, to conferences. MultiCare, for example, sent its CEO, board members and spouses to Estes Park, Colo., for a conference.
“Taking spouses to Colorado, it’s very important in this kind of a business that spouses of either board members or, for that matter, the CEO have some knowledge of the business this is, in terms of complexity,” Folsom said.
Sharon Ness, a nurse who works for the United Food and Commercial Workers Union, is negotiating a contract for nurses at MultiCare’s Mary Bridge Children’s Hospital in Tacoma.
Learning that MultiCare paid country club dues for CEO Cecchettini, “It’s making my stomach just twist,” she told KUOW.
“Maybe that’s where they need to do their networking. But at that salary, she should be able to pay her own country club fees,” Ness said. “That makes me really angry, and I will use that information at negotiations.”