A report by FierceHealthFinance -- a Web site operated by the online marketing company FierceMarkets -- said the upward spiral of compensation is self-perpetuating, with chief executive officers acting much like free agents and not necessarily tied to a specific geography.
"It's a national labor market for healthcare executives," Claudia Wyatt-Johnson, a healthcare compensation consultant in Chicago, said in a statement. "We get the 990s (tax forms) go through them in detail, and they see what the comparables (salaries) are. Then we scrape (the trustees) off the floor."
The report -- "Seven 7-figure paychecks" -- said an IRS survey found the average compensation for a U.S. non-profit hospital chief executive officer was about $490,000 per year in 2006, but dozens of top non-profit hospital executives at larger institutions take home seven-figure paychecks.
In California, the average non-profit hospital chief executive officer earns nearly $750,000 per year in total compensation, the report said.
Samuel Downing, CEO of the Salinas Valley (Calif.) Memorial Healthcare System, had total compensation of $3.67 million in 2009. However, he retired with a $3 million lump sum in 2009, on top of his base pay in 2009 of nearly $670,000, the report said.
Salinas is located in one of the poorest large cities in the Golden State and it routinely spends eight figures a year on uncompensated care and loses even more on Medicare patients, the report said.