Discussion Response 3

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Compensation of Chief Executive Officers at Nonprofit US Hospitals Karen E. Joynt, MD, MPH ; Sidney T. Le, BA; E. John Orav, PhD; Ashish K. Jha, MD, MPH

H ospital chief executive officers (CEOs) play a criticalrole in shaping the performance of their organiza-tions through setting organizational priorities, allo- cating resources, and hiring clinical leadership. Indeed, in a recent large national survey1 of hospital board chairpersons, respondents reported that CEOs were the single most influ- ential individuals in shaping quality performance at their institutions.

One way to potentially improve quality at an institution is to tie the CEO’s compensation to the institution’s perfor- mance. This has been broadly used in other industries, and data suggest that metrics chosen for inclusion in CEO compensa- tion packages can affect executives’ behavior.2,3 However, we know little about how CEOs in the hospital industry are paid

and the specific factors that underlie their compensation, with much of the data either decades old or focused on a limited sample of institutions.4-8 These issues are particularly salient among nonprofit institutions, in which the metric of organi- zational success in many industries—the profitability of the or- ganization—must be balanced against more mission-driven fac- tors, such as the quality of care delivered and the degree of community benefit provided. Yet, we are unaware of any em- pirical data on the metrics by which CEOs of nonprofit hospi- tals are paid or to what degree the hospital’s quality of care or level of community benefit affects their compensation.

In mid-2012, national data on compensation of CEOs of nonprofit entities became publicly available for the first time. We used these newly available data to answer 3 questions. First,

IMPORTANCE Hospital chief executive officers (CEOs) can shape the priorities and performance of their organizations. The degree to which their compensation is based on their hospitals’ quality performance is not well known.

OBJECTIVE To characterize CEO compensation and examine its relation with quality metrics.

DESIGN, SETTING, AND PARTICIPANTS Retrospective observational study. Participants included 1877 CEOs at 2681 private, nonprofit US hospitals.

MAIN OUTCOMES AND MEASURES We used linear regression to identify hospital structural characteristics associated with CEO pay. We then determined the degree to which a hospital’s performance on financial metrics, technologic metrics, quality metrics, and community benefit in 2008 was associated with CEO pay in 2009.

RESULTS The CEOs in our sample had a mean compensation of $595 781 (median, $404 938) in 2009. In multivariate analyses, CEO pay was associated with the number of hospital beds overseen ($550 for each additional bed; 95% CI, 429-671; P < .001), teaching status ($425 078 more at major teaching vs nonteaching hospitals; 95% CI, 315 238-534 918; P < .001), and urban location. Hospitals with high levels of advanced technologic capabilities compensated their CEOs $135 862 more (95% CI, 80 744-190 990; P < .001) than did hospitals with low levels of technology. Hospitals with high performance on patient satisfaction compensated their CEOs $51 706 more than did those with low performance on patient satisfaction (95% CI, 15 166-88 247; P = .006). We found no association between CEO pay and hospitals’ margins, liquidity, capitalization, occupancy rates, process quality performance, mortality rates, readmission rates, or measures of community benefit.

CONCLUSIONS AND RELEVANCE Compensation of CEOs at nonprofit hospitals was highly variable across the country. Compensation was associated with technology and patient satisfaction but not with processes of care, patient outcomes, or community benefit.

JAMA Intern Med. 2014;174(1):61-67. doi:10.1001/jamainternmed.2013.11537 Published online October 14, 2013.

Invited Commentary page 68

Supplemental content at jamainternalmedicine.com

Author Affiliations: Department of Health Policy and Management, Harvard School of Public Health, Boston, Massachusetts (Joynt, Le, Jha); Department of Biostatistics, Harvard School of Public Health, Boston, Massachusetts (Orav); Cardiovascular Division, Department of Medicine, Brigham and Women’s Hospital, Boston, Massachusetts (Joynt); Cardiology and Vascular Medicine Section, Department of Medicine, Veterans Affairs Boston Healthcare System, Boston, Massachusetts (Joynt); Division of General Internal Medicine, Department of Medicine, Brigham and Women’s Hospital, Boston, Massachusetts (Orav, Jha); General Internal Medicine Section, Department of Medicine, Veterans Affairs Boston Healthcare System, Boston, Massachusetts (Jha); currently a medical student, University of California, San Francisco (Le).

Corresponding Author: Ashish K. Jha, MD, MPH, Department of Health Policy and Management, Office 405, Harvard School of Public Health, 677 Huntington Ave, Boston, MA 02115 ([email protected]).

Research

Original Investigation

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what is the range of compensation for CEOs of nonprofit hos- pitals in the United States? Second, which structural and or- ganizational factors of hospitals are associated with the com- pensation of CEOs? Finally, to what extent is hospital CEO pay associated with the institution’s financial performance, tech- nologic capabilities, patient outcomes, or metrics of commu- nity benefit provided?

Methods Data Sources We linked 7 data sources: (1) publicly available Form 990 tax returns compiled by GuideStar (http://www.guidestar.org) for US hospitals filing as nonprofit entities in 2009; (2) the Ameri- can Hospital Association annual survey; (3) rural-urban com- muting area codes9; (4) Hospital Compare data, which con- tain process of care measures and the Hospital Consumer Assessment of Healthcare Providers and Systems survey; (5) the 2009 Medicare Provider Analysis and Review File; (6) Medi- care cost reports; and (7) the Medicare impact file. This study was approved by the Office of Human Research Administra- tion at the Harvard School of Public Health.

Identifying Executives From the 990 forms, we identified 1877 CEOs overseeing 2681 nonfederal, private, nonprofit acute-care hospitals in the United States. These hospitals comprise more than 98% of pri- vate nonprofit US hospitals.

Structural and Organizational Measures We hypothesized that CEOs who oversaw more complex or- ganizations (measured by number of beds, number of hospi- tals overseen, membership in a system, or being a major teach- ing hospital) would be compensated more highly than others. We also examined other characteristics, including a hospi- tal’s proportion of Medicare patients (a marker of payer mix) and its disproportionate share hospital index (a measure of the proportion of low-income patients), hypothesizing that the CEOs of hospitals with a less favorable payer mix might re- ceive lower compensation.

Financial Performance Measures We examined 4 measures of financial performance: total mar- gin (calculated from the Medicare Cost Reports as the ratio of net income to net revenue plus other income), liquidity (the ratio of current assets to total liabilities), capitalization (the ra- tio of fund balances to total assets) all representing perfor- mance in fiscal year 2008,10 and occupancy rate (from the American Hospital Association survey representing calendar year 2008). We examined hospital performance in 2008 be- cause we assumed that the prior year’s performance would in- fluence the subsequent year’s compensation.

Technologic Measures For each hospital, we used a well-validated technologic index11,12 that combines the presence of several advanced tech- nologies into a single score (eg, positron-emission tomogra-

phy, magnetic resonance imaging, and the capability of per- forming complex operations) (Supplement [eTable 1]). We assigned higher weights to technologies that are relatively rare.

Quality-of-Care Measures We selected a set of quality metrics that are endorsed by the National Quality Forum13 and used by the Centers for Medi- care and Medicaid Services for public reporting and have sub- sequently formed the basis for new mandatory federal pay- for-performance initiatives, such as value-based purchasing14

and the Hospital Readmission Reduction Program. Although these metrics are not comprehensive, they represent the best and most widely used measures of hospital quality. For each hospital, we calculated a composite measure of performance on processes of care for acute myocardial infarction, conges- tive heart failure, and pneumonia for calendar year 2008 (Supplement [eTable 2]).15,16 To assess patient satisfaction, we used Hospital Consumer Assessment of Healthcare Providers and Systems data and focused on overall satisfaction (the pro- portion rating the hospital a 9 or 10 on a 10-point scale). We built patient-level hierarchical logistic regression models to cal- culate 30-day risk-adjusted mortality and readmission rates for patients admitted with acute myocardial infarction, conges- tive heart failure, or pneumonia in calendar year 2008, ex- cluding December because 30-day outcomes crossed into 2009 (Supplement [eTables 3 and 4]). We built composite mortality and readmissions measures across the 3 conditions for each hospital using indirect standardization.

Community Benefit Measures We used hospital-reported 990 forms to determine charity care and other community benefits provided in calendar year 2009, which are self-reported as a proportion of total hospital ex- penditures. Charity care represents uncompensated care, un- reimbursed Medicaid care, and unreimbursed costs from other means-tested government programs. Other community ben- efits include community health services, health profession- als’ education, subsidized health services, research, and con- tributions to charitable organizations.17

Primary Outcome Our primary outcome was CEO compensation in calendar year 2009. For each executive, we used the 990 forms to obtain re- portable compensation from the primary organization (includ- ing benefits and deferred compensation), reportable compen- sation from related organizations (ie, a foundation associated with a hospital), and estimated other compensation from the primary and related organizations. We summed these ele- ments to determine each CEO’s total compensation package. To account for regional variations in the cost of care, we de- flated each CEO’s compensation by the Medicare Wage In- dex, used by Medicare to adjust prospective payments to hos- pitals for hospital wage level differences between metropolitan statistical areas.

Statistical Analysis We began by plotting the distribution of CEO compensation. We then calculated summary statistics for the characteristics

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of the hospitals that each CEO managed, breaking the sample into the lowest decile, middle 8 deciles, and top decile of com- pensation. In cases in which executives managed multiple hos- pitals, we averaged hospital characteristics weighted by the number of beds. Thus, analyses were carried out at the CEO level, with each CEO assigned the aggregate characteristics of the beds they managed. We examined the relationship be- tween wage index–deflated CEO compensation and hospital structural characteristics, using multivariable linear regres- sion models with CEO compensation as the outcome and each of the key hospital characteristics as predictors including num- ber of beds overseen, number of hospitals overseen, teaching status (major, minor, or nonteaching), census region, loca- tion (urban vs rural), critical access status, proportion of Medi- care patients, and disproportionate share hospital index.

Next, we examined whether a hospital’s performance on measures of financial performance, technology index, qual- ity and patient outcomes, or community benefit was associ- ated with CEO compensation. We individually examined each metric in models adjusted for the structural characteristics out- lined above and then proceeded to our full model including all of these variables. Because of interrelationships between the quality measures,18,19 we tested for but found no evi- dence of collinearity (Supplement [eTable 5]). We used the lin- ear models to calculate adjusted compensation for low per- formers (those at the 25th percentile) and high performers (75th percentile) on each metric.

Because we were concerned that focusing on just 3 condi- tions for our mortality outcomes may not adequately capture the breadth of hospital care provided, we also created, as a sen- sitivity analysis, a 19-condition composite of medical and sur- gical mortality rates that comprise a large proportion of hospi- tal care20 (Supplement [eTable 6]). We compared the relationship between CEO pay and outcomes across these 19 conditions.

We conducted additional sensitivity analyses. Because CEOs’ compensation might be based on improvement over time rather than performance in a single year, we conducted analyses using the change in financial performance and quality performance from 2006 to 2008 as our predictor; for patient satisfaction scores, which became publicly available in 2007, we used change from 2007 to 2008. Finally, because the data on CEO pay were some- what right-skewed and because the factors that affect CEO pay at wealthy hospitals may be different from those that affect CEO pay among low-paying hospitals, we repeated our analyses using quantile regression at the 25th, 50th, and 75th percentiles.

We considered a 2-tailed value of P < .05 to be significant. Analyses were performed using commercial software (Stata, version 12.1; StataCorp).

Results We identified 1877 executives responsible for 2681 hospitals. The CEOs had an unadjusted mean compensation of $595 781

Figure. Distribution of Chief Executive Officer Pay

0 <50 000 1 000 000

1 500 000 2 000 000 ≥3 000 000

10.0

9.0

Ex ec

ut iv

es , %

Compensation, $

8.0

7.0

6.0

5.0

4.0

3.0

2.0

1.0

500 000100 000 1 100 000 1 600 000

2 100 000 600 000200 000 1 200 000

1 700 000 2 200 000

700 000300 000 1 300 000 1 800 000

2 300 000 800 000400 000 1 400 000

1 900 000 2 400 000

900 000 2 500 000 2 700 000 2 800 000

2 900 000 2 600 000

Histogram of chief executive officer pay at US nonprofit hospitals in calendar year 2009.

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and a median compensation of $404 938 in 2009. Distribu- tion of the compensation is shown in the Figure. The CEOs in the lowest decile of compensation, with a median compensa- tion of $117 933, were largely responsible for small, nonteach- ing hospitals in rural areas, most frequently in the Midwest (Table 1). The CEOs in the highest decile of compensation, with a median compensation of $1 662 548, oversaw larger, urban hospitals, which were more often major or minor teaching hos- pitals. Overall median hospital margins were 3.5%, and me- dian occupancy rate was 63.0% (Table 2). Hospitals’ median performance on process measures was 93.4% and on patient satisfaction, 65.0%. Median charity care and other commu- nity benefit comprised 1.6% and 1.4% of total hospital expen- ditures, respectively.

Hospital Characteristics and CEO Compensation In multivariable analyses, compensation was higher for CEOs managing more beds ($550 per additional bed; 95% CI, 429- 671; P < .001) (Table 3). Managing more hospitals was also as- sociated with higher pay ($32 609 per additional hospital; 95% CI, 5154-60 063; P = .02). The CEOs of major teaching hospi- tals were paid $425 078 more (95% CI, 315 238-534 918; P < .001) than were CEOs of nonteaching hospitals. The CEOs of hospi- tals with a higher proportion of poor patients and Medicare pa- tients were generally compensated less than were other CEOs (Table 3).

Hospital Financial Performance and CEO Compensation Hospital financial performance was not significantly associ- ated with CEO compensation in our fully adjusted models (Table 4). High performers on total margins, for example, paid their CEOs similarly to poor performers (difference, $7045; 95% CI, −16 463 to 30 553; P = .56), and the relation- ships for liquidity, capitalization, and occupancy rate were also nonsignificant.

Advanced Technologies and CEO Compensation The presence of higher levels of advanced technology, as measured by a technology index, was associated with sub- stantially higher CEO compensation. High performers on the technology index received $135 862 additional pay com- pared w ith poor performers (95% CI, 80 744-190 980; P < .001).

Hospital Quality Performance and CEO Compensation We found no significant association between performance on process quality, risk-adjusted mortality, or readmission rates and CEO compensation (Table 4). High performers on mortal- ity rates paid their CEOs $4667 less than poor performers (95% CI, −27 457 to 18 123; P = .69). However, hospitals with higher patient satisfaction scores compensated their CEOs more than did hospitals with lower scores (difference, $51 706; 95% CI, 15 166 to 88 247; P = .006).

Table 1. Characteristics of Hospitals Associated With Each Chief Executive Officer

Characteristic

Decile of Compensation

Lowest 2-9 Highest No. of officers 188 1502 187

No. of hospitals 189 1841 651

Total compensation, $

Median (IQR) 117 933 (89 221-136 390) 405 167 (264 196-635 226) 1 662 548 (1 358 702-2 327 567)

Mean (SD) 106 324 (38 985) 469 096 (254 133) 2 105 394 (1 201 963)

No. of beds

Median (IQR) 39 (25-73) 136 (61-256) 234 (80-451)

Mean (SD) 62 (76) 185 (169) 310 (290)

Region, %

Northeast 9.6 26.2 23.0

Midwest 50.5 34.0 32.1

South 23.4 26.4 31.5

West 16.5 13.4 13.4

Teaching, %

Major 0.0 6.8 33.8

Minor 12.8 25.2 33.6

Nonteaching 87.2 68.0 32.6

Rural-urban commuting area, %

Urban 12.8 53.9 88.7

Suburban 3.7 4.4 0.9

Large rural town 8.5 19.2 6.6

Small town/isolated rural 75.0 22.5 3.7

Medicare patients, % 53.2 (49.0-67.2) 48.6 (42.9-54.6) 41.8 (38.0-48.5)

Disproportionate share index 0.0 (0.0-0.0) 17.2 (3.6-26.3) 21.5 (12.2-30.3)

Critical access hospital 69.7 18.3 2.8

Abbreviation: IQR, interquartile range.

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Community Benefit and CEO Compensation We found no association between charity care and CEO com- pensation (−$52 for high performers vs poor performers; 95% CI, −441 to 337; P = .79) or between community benefit and CEO compensation ($0 additional compensation for high perform- ers vs poor performers, 95% CI, −3 to 3; P = .88).

Sensitivity Analysis When we substituted a 19-condition composite mortality rate into the model, we found no association with CEO pay (−$453 for high vs low performers; 95% CI, −35 992 to 35 086; P = .98) (Supplement [eTable 7]). Using changes in financial performance and quality performance from 2006 to 2008 as predictors, technology was the only factor sig- nificantly associated with CEO compensation (Supplement [eTable 8]).

When we used quantile regression to examine the dis- tribution of CEO salaries based on varying levels of financial and quality performance, we found relatively similar results in all but 2 instances. Whereas we found little relationship between total margins and CEO pay in our overall analyses, we found that the 25th percentile and median CEO salaries were higher at high-margin hospitals compared with low- margin hospitals (Supplement [eTables 9 and 10]). There was no relationship between hospital total margin and CEO pay at the upper end of the pay scale (Supplement [eTable 11]). Similarly, we found that the 25th percentile of CEO compensation was somewhat higher among hospitals with high performance on process quality measures compared with hospitals with poor performance on the process quality measures. The difference in median salaries was even smaller and not statistically significant, and there was no significant difference based on process quality scores at the upper end of the CEO pay scale.

Discussion

We examined the compensation of CEOs of nonprofit US hos- pitals and found that executives who oversaw larger teaching hospitals were the most highly compensated. Furthermore, even after accounting for these and other structural factors, a higher level of advanced technologies was associated with sig- nificantly higher compensation. Although we found no rela- tionship with hospital performance on standard process or out- come metrics, patient satisfaction had a modest but significant relationship with CEO compensation. Finally, despite the fact that we examined nonprofit institutions whose tax-exempt sta- tus is based on their ability to demonstrate community ben- efit, we found no relationship between the degree of that ben- efit and CEO compensation.

Among the quality metrics we examined, only patient sat- isfaction was consistently associated with CEO compensa- tion. The factors that shape the compensation package of CEOs likely reflect a combination of boards’ awareness of hospital performance on key metrics and its assessment of the ability of the CEO to influence those metrics. Boards may have an easier time assessing patient satisfaction than other quality metrics, such as risk-adjusted mortality rates, or may see pa- tient satisfaction as a key measure of organizational perfor- mance and marketability. Of course, it is possible that boards reward CEOs on other factors that we could not measure, such as staff satisfaction.

Table 2. Hospital Performance

Characteristic % Median (IQR) Hospital financial outcomes

Total margins 3.5 (0.1-7.5)

Liquidity 200.1 (135.3-298.4)

Capitalization 51.6 (33.5-66.4)

Occupancy rate 63.0 (50.3-72.8)

Presence of advanced technologies

Technology index 0.406 (0.246-0.609)

Hospital quality

Process measures, 2008 93.4 (89.7-95.5)

Patient satisfaction, 2008 65.0 (60.0-70.0)

Risk-adjusted mortality rates, 2008 12.2 (10.3-14.6)

Risk-adjusted readmission rates, 2008 21.2 (18.8-24.3)

Community benefit

Charity care provided, % of total expenditures

1.6 (0.7-2.8)

Other community benefit, % of total expenditures

1.4 (0.5-3.3)

Abbreviation: IQR, interquartile range.

Table 3. Hospital Characteristics and Chief Executive Officer Compensation

Characteristic Additional Compensationa

(95% CI) P

Value Mean wage-adjusted compensation, $

595 781 (not applicable)

No. of beds, $ 550 (429 to 671) <.001

No. of hospitals, $ 32 609 (5154 to 60 063) .02

Region, $

Northeast Reference

Midwest 29 206 (−36 476 to 94 888) .38

South 77 449 (9070 to 145 829) .03

West 32 533 (−51 917 to 116 983) .45

Teaching, $

Not teaching Reference

Major 425 078 (315 238 to 534 918) <.001

Minor 151 352 (87 899 to 214 805) <.001

Rural-urban commuting area, $

Urban Reference

Suburban −137 690 (−272 195 to −3184) .045

Large rural town −124 491 (−198 703 to −50 279) .001

Small town/isolated rural −195 553 (−284 305 to −106 801) <.001

Critical access hospital, $ −1156 (−136 390 to 134 078) .99

Disproportionate share index, $ −38 938 (−59 621 to −18 254) .000

Percent Medicare patients, $ −21 112 (−43 137 to 913) .060

a For continuous predictors, additional compensation represents the change in compensation associated with a 10% change in the independent variable. Model is adjusted for all listed covariates.

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There was no consistent association between CEO pay and more traditional measures of quality, such as adherence to pro- cess measures or patient outcomes. In one set of sensitivity analyses, we found that the low end (25th percentile) of CEO pay at hospitals with better adherence to process measures was somewhat higher than at hospitals with worse adherence to process measures, although the difference was small. This could represent a chance finding, or it might suggest that at hospitals with lower-paid CEOs, there appears to be a little more attention given to process quality metrics.

Given that hospital boards have a fiduciary responsibility to represent the welfare of the community, they could make the link between their CEO’s pay and hospital quality perfor- mance more explicit. It may be that they have not done so be- cause they may believe that these quality metrics are not ad- equate measures of CEO performance. Whether linking CEO compensation to quality metrics would lead to better care is unknown; an alternative possibility is that linking CEO com- pensation explicitly to quality metrics could have unin- tended consequences, such as reducing hospitals’ incentive to provide to medically or socially complex populations.

We were surprised to find only weak nonsignificant rela- tionships between CEO pay and financial performance. How- ever, indirect measures of financial performance, including payer mix and advanced technology, were associated with CEO compensation. Furthermore, we found that at the lower half of the pay scale, there appeared to be a modest relationship between hospital total margins and CEO pay. It may be that total margins play a role in CEO salary up to a point, beyond which, as compensation rises, it has little bearing on measures of qual- ity or financial performance. The fact that hospitals with higher levels of technology paid their CEOs more has several poten- tial explanations. First, the advanced technologies may iden- tify hospitals that provide more “complex” care and there- fore need to pay more to attract a leader who can manage a complex organization. Alternatively, boards may value their hospitals being seen as technologic leaders in the commu-

nity. Finally, high levels of technology may simply be a reflec- tion of financial health: hospitals with the resources and ac- cess to capital to purchase advanced technologies may be rewarding their CEOs for this success.

Although there has been prior work21 examining the relationship between CEO pay and firm performance broadly, there have been few recent data on the compensa- tion of hospital CEOs. Four large studies using data from the 1990s found that CEO compensation was linked to hospital financial performance,4 profit status,5 size, and location6

and only somewhat to quality.22 Two recent studies of non- profit CEO compensation, one in Connecticut7 and one in New Hampshire,8 also found no relationship between CEO p ay a n d q u a l it y o r c o m m u n it y b e n e f it , a l t h o u g h t h e samples were small (29 and 23 hospitals, respectively). We are unaware of any recent data on national patterns of hos- pital CEO compensation.

There are limitations to our study. To assess CEO com- pensation, we relied on data that, although audited, have not been extensively validated. Although the 990 forms are intended to include all compensation, even that which is indirect or in-kind, this type of compensation may be under- reported. Hospitals may not consistently use the same defi- nitions of uncompensated care or may inflate costs attrib- uted to charity by using list prices for this care.23 The quality measures we assessed were those that are publicly available and that are components of federal pay-for-performance programs but may have their own limitations. For example, patient satisfaction metrics represent a combination of hos- pital performance and patient expectations. Furthermore, our selected quality metrics, although likely reflective of overall quality at each hospital, are not exhaustive; it is pos- sible that hospitals track internal quality metrics, such as infection rates, and that these may be more closely corre- lated with financial remuneration. Our metrics of financial performance may not wholly reflect the financial health of the institution, although we aimed to include a set of met-

Table 4. Hospital Financial Outcomes, Technology, Quality, and Community Benefit and Chief Executive Officer Compensationa

Characteristic Low

Performersb High

Performersb Difference (95% CI) P

Value Hospital financial outcomes, $

Total margins 592 244 599 289 7045 (−16 463 to 30 553) .56

Liquidity 595 903 595 889 −14 (−89 to 60) .71

Capitalization 596 561 594 901 −1660 (−7764 to 4445) .59

Occupancy rate 583 950 609 384 25 435 (−11 128 to 61 997) .17

Presence of advanced technologies, $

Technology index 527 938 663 800 135 862 (80 744 to 190 980) <.001

Hospital quality, $

HQA process of care, 2008 593 610 601 353 7744 (−17 312 to 32 799) .54

Patient satisfaction, 2008 574 076 625 782 51 706 (15 166 to 88 247) .006

Risk-adjusted mortality, 2008 597 485 592 817 −4667 (−27 457 to 18 123) .69

Risk-adjusted readmission, 2008 593 406 599 734 6328 (−17 480 to 30 135) .60

Community benefit

Charity care provided 595 983 595 930 −52 (−441 to 337) .79

Other community benefit 595 723 595 723 0 (−3 to 3) .88

Abbreviation: HQA, Health Quality Alliance. a Model is adjusted for all hospital

characteristics shown in Table 3, including hospital size, number of hospitals, region, ownership, teaching status, rurality, Critical Access Hospital status, Disproportionate Share Index, and proportion Medicare and additionally adjusted for all listed covariates.

b Low performers are those at the 25th percentile on each metric; high performers are those at the 75th percentile of performance on each metric. R2 for the model is 0.41.

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rics that as a group provide an adequate assessment of finan- cial performance. There may be personal characteristics of the CEO that are associated with compensation, including experience or duration of time in the organization; we did not examine these possibilities. There could be unmeasured confounders that explain the associations we found. Finally, our data examine relationships in 2008 and 2009, and these could change as health care payment models increasingly reward quality rather than simply quantity of care. Future research should track these associations over time.

Conclusions

Executive compensation metrics are a powerful reflection of the priorities of an institution and likely have the ability to shape the focus of the CEO. We found that CEO compensa- tion at nonprofit US hospitals varies widely and is associated with greater use of technology and higher patient satisfac- tion but not with the quality of care delivered, patient out- comes, or community benefit.

ARTICLE INFORMATION

Accepted for Publication: May 25, 2013.

Published Online: October 14, 2013. doi:10.1001/jamainternmed.2013.11537.

Author Contributions: Dr Jha had full access to all the data in the study and takes responsibility for the integrity of the data and the accuracy of the data analysis. Study concept and design: Joynt, Le, Jha. Acquisition of data: Le, Jha. Analysis and interpretation of data: Joynt, Le, Orav. Drafting of the manuscript: Joynt, Le, Jha. Critical revision of the manuscript for important intellectual content: Joynt, Orav, Jha. Statistical analysis: Le, Orav. Obtained funding: Jha. Administrative, technical, and material support: Jha. Study supervision: Jha.

Conflict of Interest Disclosures: None reported.

Funding/Support: Dr Joynt was supported by grant 1K23HL109177-01 from the National Heart, Lung, and Blood Institute and by the Lerner Research Award from Brigham and Women’s Hospital, Division of Cardiovascular Medicine. Additional support was provided from internal department funds from the Harvard School of Public Health.

Role of the Sponsor: The funders had no role in the design and conduct of the study; collection, management, analysis, and interpretation of the data; preparation, review, or approval of the manuscript; and decision to submit the manuscript for publication.

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Compensation of CEOs at Nonprofit Hospitals Original Investigation Research

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