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Providence Executives Rack Up Highest Salaries

The health plan ended up losing $63 million last year compared to its $22.3 million profit in 2014.
March 11, 2016

Providence Health Plan suffered a $63 million net loss in 2015, but that didn’t stop its chief executives from taking home top-dollar salary increases and bonuses, among them Jack Friedman, Dr. Robert Gluckman and Michael White.

At the same time, the health plan saw its membership numbers swell by 16.5 percent reaching 218,421 – but those numbers don’t count the hundreds of thousands of lives in Providence’s self-insured market, which include its contract with the Public Employees’ Benefit Board for state employees and their dependents.

In the Pacific Northwest, the parent company -- Providence Health & Services -- is considered a growing regional giant, according to a recent article in Modern Healthcare. The insurer ended the year with the same margin as the prior year – 1.8 percent -- amid growing labor and pharmaceutical costs, particularly for specialty drugs.

“Market forces continue to move toward consolidation of generic drug producers, leading to significant price increases,” according to the system’s financial statements. ”In 2015, half of drugs purchased by Providence were branded drugs for which we have no ability to negotiate discounted rates.”

Just ten drugs accounted for nearly one-third of the wholesale price growth, while pharmaceutical costs grew by 30 percent, as a result of higher prices. Investment losses were the main culprit – totaling $113.6 million compared to $178 million in 2014.

Providence lost $63 million in the Oregon market last year, compared to a profit of $22.3 million in 2014, while its hospital and medical costs grew by 16 percent reaching $44.8 million, and its cash and equivalents were $130.3 million on Dec. 31, up from $56.7 million a year earlier.

Who Earned the Most?

Jack Friedman, who retired as CEO of Providence Health Plan last July after 15 years at the helm, walked away with the highest paycheck among Oregon insurers—taking home $1.1 million, an 85 percent hike.

Friedman wasn’t the only Providence executive commanding a top dollar salary. Dr. Robert Gluckman, chief medical officer, was paid $848,849, an 89 percent increase, and Michael White, principal financial officer, earned $654,462 representing an 83 percent jump.

Other insurers also rewarded their top executives with high salaries. Regence BlueCross BlueShield, the only Oregon insurer to post a profit last year of $25.8 million, paid its president, Angela Dowling, $429,732, and its chief financial officer, Vincent Price, $417,811.

Regence grew its membership by 4.9 percent, ending the year with 495,242 lives, while its hospital and medical costs fell by 1.8 percent to $1.6 billion.

The executives at Cambia Health Solutions, the nonprofit parent company of Regence health plans, also took home handsome salaries and bonuses in Oregon.

Mark Ganz, president and CEO, took home $939,041, while Jared Short, chief operating officer, earned $547,244.

How About Moda?

Moda Health Plan, which came close to shuttering its doors after devastating losses in the individual market, didn’t seem to hesitate to reward its president with a higher salary. William Johnson was paid $475,650, a 4.49 percent increase, while Robert Gootee, CEO of Moda Health and ODS Dental Plan, earned $730,665, a 16 percent hike.

To its credit, Moda recruited new physicians and nurses, ending 2015 with 30,682 provider relationships compared to 26,902 the previous year. At the same time, its hospital and medical costs grew by 41 percent reaching $1.17 billion up from $829.1 million the year before.

Among other 2015 Moda expenses, the company spent:

  • $54.9 million on salaries, wages and benefits.
  • $28.2 million on commissions.
  • $2.96 million on marketing and advertising.
  • $3.2 million on auditing, actuarial and other consulting expenses.
  • $7.2 million on outsourced services, including electronic data processing, and
  • $10.8 million on electronic data processing equipment, and related depreciation costs.

Other High Paid Executives

LifeWise, which suffered a net loss of $35.7 million last year, paid its CEO, Majd Fowzi El-Azma, $562,537, a slight 1.4 percent increase, while its hospital and medical costs reached $255.4 million.

Ken Provencher, CEO of PacificSource Health Plans, appears to be the only insurance executive whose salary decreased last year. He was paid $252,235, 8 percent less than 2014. Also, his compensation package did not include any bonuses.

PacificSource also suffered a significant net loss in 2015 of $10.2 million compared to a $16.9 million profit the year prior, but, at the same time, its hospital and medical costs showed an 8.8 percent decrease, at $509.6 million.

Bonuses Paid Out

The major health insurers didn’t seem to mind paying high triple-digit bonuses to its chief executives. Although these bonuses are included in the total compensation figures above, here’s a breakdown by health plan:

PROVIDENCE HEALTH PLAN

  • Jack Friedman, $318,640
  • Dr. Robert Gluckman, $54,159
  • Michael White, $135,130

REGENCE AND CAMBIA

  • Mark Ganz, $584,904
  • Angela Dowling, $102,347
  • Vincent Price, $195,545

LIFEWISE

  • Majd Fowzi El-QAzma, $265,133

MODA HEALTH PLAN

  • William Johnson, $155,125
  • Robert Gootee, $168,750

ODS DENTAL SERVICE

  • Robert Gootee, $135,000

Kaiser Losses and Salaries

With a net loss of $13.5 million last year, Kaiser ended up spending a higher percentage of its revenue on hospital and medical costs than the year prior -- $3.1 billion for a 7.5 percent increase. With a slight 1.5 percent growth in membership, Kaiser ended the year with 475,594 people on its books. At the same time, it handed the Oregon Association of Hospitals and Health Systems a check for $206,812.

Unfortunately, the financial reports from Kaiser Permanente only reveal the corporation’s national executive salaries. None of its Oregon leadership appear on the disclosures.

At the national level, Kaiser’s executive vice president and group president, Benjamin Chu, took home the largest salary, $6 million, a 192 percent increase. Together, 10 Kaiser executives earned $28 million, while its 14-member board of directors took home $3.1 million.

In comparison, Providence executives led the way in Oregon; its top 10 leaders earned $4.8 million, a 478 percent jump, while Regence landed in second place, $4 million went to its top 10 executives.

Providence also ended up paying its board of directors more than any other Oregon insurer. Its 14 member board received $269,500, while Oregon Dental Service came in second, $252,100 paid to six people, and PacificSource paid $175,837 to 13 board members. Diane can be reached at [email protected].

For a detailed look at the salaries of Oregon health insurance executives, click here

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