Follow the numbers to report on hospital executives’ compensation packages

By M.B. Pell

The tax-exempt status of not-for-profit hospitals has received heightened scrutiny over the past few years as policy makers across the country and at every level of government try to ensure their communities receive tangible benefits in exchange for the millions of dollars in lost tax revenue.

One factor encouraging policy makers and the public to treat tax-exempt hospitals less like charities and more like for-profit businesses is the compensation packages of hospital executives. These executives work for charities, but often receive seven-digit annual incomes and perks such as country club memberships, first-class air travel and free housing.

The 990 forms filed by not-for-profit hospitals with the Internal Revenue Service are the first stop in an investigation into the compensation of hospital executives.

These documents can be obtained through GuideStar, a company that gathers and publicizes information about all nonprofit organizations, not just hospitals. They offer one level of service that is free of charge; it simply requires that you register with GuideStar.

Once you have the hospital's 990s, skim down to Part VI – the officers, directors, trustees, key employees and highest compensated employees. Sometimes hospitals list the employees' position and sometimes they do not.

Some executives work for more than one hospital, so make sure to check out each hospital in the system. Use the total compensation number, including nontaxable benefits such as insurance, to capture the full extent of the executive's compensation.

Be sure to run these numbers by the hospital before publishing them. Sometimes the hospitals report incorrect information on their 990s.

Part VII also includes pay information and the reported hours. By adding up the hours worked at each hospital for one employee you may find they claim to be working 32 hours a day.

Parts II and VII on the forms include information about benefits provided to board members – another target-rich environment. The Atlanta Journal-Constitution recently ran a story revealing that board members at an Atlanta-area hospital were provided with high-end health insurance, iPads and other expensive perks.

The 990s also include information about subsidiaries of the hospital, which could offer clues about for-profit businesses operated by the hospital.

Publishing an executive's pay alone can be titillating for audiences, but juxtaposing pay with information about how well the hospital performs and what it does to serve the community adds substance to the story.

For example:

• Has the CEO been paid $1 million a year even as the hospital posts a negative margin?
• Does the CEO of a small rural hospital make more than the CEOs of large urban hospitals?
• Are the salaries of the CEOs increasing as the amount of charity care they provide decreases?

In Georgia, hospitals are required to submit information to the state Department of Community Health about profit margins, the number of beds and charity care levels. Other states also collect this information and make it available through public records requests.

M.B. Pell is the consumer watchdog on the Atlanta Journal-Constitution's investigative team. Since joining the paper in October he has written stories about the executive compensation of not-for-profit hospital CEOs, the markup of hospital services and the sale of patient debt to companies that specialize in debt collection.