Orlando Health Hire Prompts Look at CEO Pay

Dec 24, 2014

Orlando Health’s board of directors is about to offer the job of CEO to someone new.

A list of the top 10 hospitals in Florida, ranked by net revenue, and their CEO’s pay.

Regardless of who it is, analysts say one thing is for sure: that chief executive will likely earn more than $1 million in salary and benefits to run the state’s second-largest hospital system of eight hospitals and more than 1,700 beds.

Like most Central Florida hospitals, Orlando Health is a non-profit, which means they don’t send profits to stockholders. And the salaries of these top executives is far lower than what is made by their counterparts at for-profits, such as those owned by the HCA or Community Health Systems chains.   

So what exactly do you get for a $1 million salary? There’s a checklist that will likely bring Orlando Health’s new CEO pay above the national average for individual non-profit hospitals, which is about $600,000 year. That’s because Orlando Health is an urban teaching hospital, it has lots of beds, and uses advanced technology.

Hospital analyst Michael Carroll said seven-figure salaries for CEOs are becoming the norm.

“And the concern is that at $1 million, that executive pay relates to about 16 to 17 nurses,” Carroll said.

Hospital CEOs now earn more than most doctors and surgeons. It’s one reason U.S. hospitals have the highest administration costs in the developed world – about 25 cents of every health care dollar goes to administration, according to a report from The Commonwealth Fund. 

Carroll said executive compensation needs to be looked at.

“Now that’s not just executive salaries, but the whole administrative process of health care delivery which is burdensome, fat, and needs to be carved back,” Carroll said.

Tom Flannery, who’s a partner at consulting firm Mercer, said highlighting CEO pay at non- profit hospitals is “rubbernecking.”  Flannery said healthcare is complicated- and good CEOS are worth their weight in gold.

“These executives expect to be appropriately compensated for the risk they’re taking to navigate these very large, multi-billion organizations through some very complex issues,” Flannery said. “These are jobs that are not for the faint of heart.”

A study published earlier this year in the Journal of the American Medical Association found no real link between a CEO’s pay and the hospital’s quality measures. 

Analysts said $1 million-plus in salary and benefits for the CEO of Orlando Health is not out of line. Orlando Health’s competitor, Adventist Health System, pays eight of its top executives salaries more than $1 million dollars.

Note: Salaries include benefits and retirement, unless noted. Dr. Jamal Hakim is the interim CEO of Orlando Health. Ronald Hytoff and Isaac Mallah have both retired. Carlos Migoya’s pay is base salary only.

-- Health News Florida reporter Abe Aboraya is part of WMFE in Orlando. Contact him at (407) 273-2300 x 183, on Twitter @AbeAboraya, or email at aaboraya@wmfe.org. Health News Florida receives support from the Corporation for Public Broadcasting.