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Executive Compensation at NH's Non-Profit Hospitals

Executive Summary

Date: July 2nd, 2012

The New Hampshire Center for Public Policy Studies was funded to conduct a review of executive compensation practices and trends at the state’s non-profit hospitals. We looked at publicly available documents, such as IRS filings, as well as records produced by non-profit hospitals themselves, through the Attorney General’s office, including W2 wage statements, employment contracts, minutes from board of director meetings and statewide surveys of compensation practices.

After a review of those records, we came to the following findings:

1.The majority of hospitals follow established best practices. Most of New Hampshire’s non-profit hospitals meet the federal threshold for setting executive compensation, though a small handful appear to fall short on one or more key standards. This could lead to increased regulatory scrutiny of compensation practices and the “reasonableness” of executive pay at those institutions.

2. In our simple analysis, we found no strong relationship between CEO compensation and hospital performance. According to the data we reviewed, the most reliable indicator of CEO pay is the size of the hospital, as measured by operating budget. But we were unable to draw any conclusions about whether a strong relationship exists between CEO compensation and a hospital’s quality or cost of care, or the level of charitable care provided by a hospital.

3.CEO pay is increasing faster than average wages in New Hampshire. Non-profit hospital CEOs in New Hampshire have, on average, seen their total compensation increase about 18 percent over the most recent four years for which data is available (2006 to 2009). The average private sector worker in the state saw a wage increase of 4.8 percent in that same period, and all healthcare sector workers received wage increases of 12.8 percent.

4. CEO compensation in New Hampshire falls roughly in the middle of New England-wide trends. While CEO compensation varies greatly across New Hampshire’s non-profit hospitals, the rate of increase in average compensation package appears to be roughly in line with trends across the region. That doesn’t mean that state-by-state averages are the same. The average New Hampshire CEO earns slightly more than the average hospital CEO in Northern New England, and considerably less than the average figure for all New England hospital CEOs.

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