The media have been on a feeding frenzy today around Tuesday’s disclosure of hospital executive compensation packages. Like the sunshine list, it is a chance for the private sector to paint a picture about how the public sector has been wining and dining on the taxes of the downtrodden, even if it is less than true.
The real story is there are really no big revelations here.
The most shocking example we found appears to be the work of sloppy reporting rather than executive excess.
The Toronto Star reported that Dr. Robert Howard, CEO of St. Michael’s Hospital, was receiving “a $75,000 allowance for a car.” This would lead most people to believe Howard was getting $75,000 each year to apply to a lease or purchase of a vehicle. In fact, had the reporters been a bit more careful, they might have figured out that it was for a lease or equivalent for a car whose retail value was up to $75,000. Nice, but at this level, ho-hum.
Given the work-related travelling these CEOs do, it would be unusual not to have a travel allowance. Howard’s appears to be in the middle of the pack. Some execs have no travel allowance and a mileage rate that most of us would find inadequate given present gas prices.
Over the past year the OHA has been giving hospitals advice on the upcoming requirement for public disclosure, including cleaning up any embarrassing perks. Most of these perks would have been ruled out-of-order last August when the Ontario Broader Public Sector Accountability Act came into effect.
A memo from St. Joseph’s Health Care in London indicates what is acceptable and what’s not from the flexible spending accounts many executives are given. Exercise programs are in, including memberships to a local gym. Out is the cost of fitness equipment, membership in sports leagues, tennis lessons, or membership in golf, curling, tennis, squash or social clubs. Professional fees/dues, professional development, and home/mobile internet are in, as well as nutrition support. The cost of food, vitamins, cookbooks or cooking utensils is out.
Dr. Bob Bell, The University Health Network CEO, has already lost his $3,400 annual membership to the private York Club. He may have to dip into his $753,992 annual compensation should he wish to continue rubbing elbows with Toronto’s elite. Bell has traditionally been among the top CEO earners in Ontario hospitals. But Bell is earning about half of the compensation paid to Dr. Chris Mazza, the ORNGE air ambulance CEO, who was recently outed as earning $1.4 million per year.
The OHA points out that CEO compensation is in the bottom quartile when compared to executives in the private sector.
No kidding. The Toronto Star recently reported Canada’s top 100 CEOs received average compensation of $8.4 million. That’s a 27 per cent increase from 2009 to 2010. Meanwhile the average Canadian received an increase of 1.1 per cent in the same period. Evidently the 1 per cent believes they are the only individuals doing work of value.
But hospital execs are not really in the private sector, even though hospitals are technically non-profit corporations. We find out just how independent they are every time the Minister of Health decides to appoint a supervisor and suspends a hospital’s board.
The NDP is arguing that hospital CEOs should be capped at twice the Premier’s salary of $208,000. Windsor’s David Musyj – who regularly rants about arbitration decisions for front line staff – argues against limits to CEO compensation. Obscurely he says a cap would also require a floor. He also echoes the OHA line that the NDP’s proposal would impede hospitals from recruiting quality executives.
This flies in the face of the OHA’s own commissioned report on executive compensation, which suggests most OHA hospital CEOs come from within. In their survey, while 40 per cent of CEOs reported having previously served as a CEO in or out of Ontario, 25 per cent had previously been a Chief Nursing Officer, Chief Operating Officer or Chief Financial Officer, and 24 per cent – including Musyj – had been a Vice-President. Obviously Windsor Regional Hospital didn’t stray far to find its most recent CEO.
The present compensation levels indicate there is already a defacto floor linked to the overall size of the operating budget. What we haven’t found yet is where that ceiling is.
Hospital CEOs are presently under the government’s wage freeze, although the freeze does not affect performance bonuses, some of which can be as high as 30 per cent of base salary. It’s only a true freeze if an executive received their maximum bonus the previous year.
While hospitals are posting the contracts of senior executives, many of the contracts are years old, failing to reflect current compensation levels. For example, the Executive Director Public Affairs and Communications at Windsor Regional Hospital appears to be under compensated at just over $90,000 per year. But that was the salary in 2003. When the dust clears, we may have to bring out our pads of freedom of information request forms after all.
The postings are not always easy to find, prompting us in some cases to e-mail to the hospital asking where the information is. And not all the contracts are necessarily detailed. Sometimes the hospitals instead post summaries. As the architect Mies van der Rohe once said, “god is in the details.”
The good news from this is that at least the outliers will be identified and hospital boards will be under pressure to bring their compensation and perks back in line. The bad news is that not all the outliers are necessarily earning more than their counterparts.
In the coming days we will likely find more of those outliers as the contracts are scrutinized community by community. We have yet to view all the contracts from more than 150 public hospitals in Ontario – likely nobody has. Hopefully somebody will be making a really big chart soon.
Meanwhile, if you want to check out executive salaries at your local hospital, these are now on most individual hospital’s web sites — if you can find them.