Some health CEOs earned millions

Critics cite income disparity; supporters say big salaries necessary.

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2:28 AM Monday, December 12, 2011

By Ben Sutherly and Chelsey Levingston

Staff Writers

Seven executives at local nonprofit hospitals and their parent networks each collected $1 million or more in 2009, the most recent year information was available for all major Cincinnati and Butler County hospitals.

A Journal examination of tax forms for 22 health executives’ pay found Kettering Health Network’s former Chief Executive Officer Frank Perez and UC Health’s former CEO Kenneth Hanover topped the list in 2009, with each receiving more than $2.6 million.

Frank Perez’ total reportable pay in 2009 of more than $5.5 million included a more than $4.5 million lump-sum, taxable retirement payment. He told the JournalNews last year he would not have accepted it if he felt it were inappropriate.

“It would prevent me from sleeping at night,” he said. “It’s far more important to fulfill the mission and the spirit of the law.”

Kettering Health became the parent organization of Fort Hamilton Hospital in 2010.

The compensation figures are a total of base pay, bonuses and incentives, and deferred compensation, vested retirement or severance pay reported on tax Form 990 by the nonprofits. The nonprofits’ operating years, calendar or fiscal, determine their tax return filing dates, according to the Internal Revenue Service.

Jim Pancoast, president and CEO of Premier Health Partners, the parent organization of Atrium Medical Center in Middletown, had the highest pay in 2010 of information available to date from that year. Pancoast collected about $4.6 million in 2010, most of which is a lump sum paid out through a supplemental executive retirement program.

Perez, Hanover and Pancoast were in charge of health systems comprised of multiple hospitals. Out of the top leaders of individual hospitals, James Anderson, former CEO of Cincinnati Children’s Hospital Medical Center and Susan Croushore of The Christ Hospital received the most pay.

In 2009, Anderson received approximately $1.9 million and Croushoure received approximately $529,000, according to tax records.

The main reason for Anderson’s pay increase from $1.2 million in 2008 to 2009 was based on his age and the rules of Cincinnati Children’s retirement plan, under which he wasn’t eligible to defer any of his incentive bonus in calendar year 2009, according to the hospital.

Cincinnati Children’s is one of the leading pediatric medical and research centers in the world, according to spokesman Terry Loftus.

“To achieve its vision to be the leader in improving child health, we compete nationally and globally for top medical, research and executive talent. We offer competitive salaries that enable us to attract and retain the most talented staff and appropriately recognize their significant responsibilities and achievements,” Loftus said in an email.

Ron Seifert, executive compensation practice leader for the health care practice at Hay Group, is a compensation consultant for some Cincinnati hospitals. He said CEOs of independent hospitals tend to earn more than CEOs of hospitals in a system and that Cincinnati Children’s and Christ Hospital are more “system-like” like because they have multiple locations and services.

“No one, including the boards of these organizations, denies this is a lot of money. But what they’ll tell you is this takes a special leader,” he said. “They come with a price tag.”

UC Health and The Christ Hospital deferred comment to Greater Cincinnati Health Council. The only hospital executive that was available or didn’t decline comment was Bryan Hehemann, president and CEO of McCullough-Hyde Memorial Hospital. His compensation was $224,481 in 2010, the smallest.

“I think my salary is subjective to market considerations,” Hehemann said.

Health care executives are responsible for managing complex organizations that deal with life and death situations, said Colleen O’Toole, president of Greater Cincinnati Health Council.

Execs continued on A4

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