Responsibilities Vary, but Pay Checks are Still Large

An examination of Kaiser, Asante, Tuality and Salem health chains suggests that executive compensation does not always correlate with complexity of the job

Do big paychecks reflect big responsibilities at Oregon’s hospitals? Or are they just a sign that top executives are good at negotiating their compensation?

The top executives of the four healthcare chains featured in this story all receive total compensation in roughly the same neighborhood – from $934,854 at the bottom, to $1.4 million at the top of the range. But the jobs they hold seem to have a much broader variation than their pay checks.

Kaiser’s Pacific Northwest President Andrew McCulloch’s base pay in fiscal year 2013 was $406,081 – below his peers – though his complete compensation package including bonuses and perks was $1.4 million, putting him at the top of the list. In exchange for that paycheck, McCulloch manages an integrated healthcare and insurance system that serves more than 500,000 people through a network of clinics, dental offices and two hospitals. He’s boss to 880 physicians, 116 dentists and 8,900 employees, and the insurance plan he oversees has $1.4 billion in assets.

Norman Gruber, president of Salem Health, had base pay of $801,372 - $1.17 million in total compensation – to run a much smaller operation, at Oregon’s busiest emergency room at Salem Hospital, along with the state’s smallest hospital at West Valley, and 4,096 full-time, part-time and temporary employees over the course of the year.

Roy Vinyard, president and CEO of Asante, had base pay of $620,228 - $1.08 million in total compensation – to run an organization close in size to Salem Health. Asante employed 4,204 full-time, part-time and temporary staffers in fiscal year 2013. Its net assets were $454.6 million at the end of the year, compared to $504.5 million at Salem.

And Richard Stenson, Tuality Healthcare CEO, who has since retired, had the highest base pay of all four health chains’ chief executives, at $845,124 in fiscal year 2013, though with fewer perks his total compensation was the lowest, at $934,853. He oversaw a staff of 1,547 full-time, part-time and temporary employees over the course of the year at a small nonprofit with net assets of just $67.4 million.

Click here to view spreadsheets breaking out executive compensation at these health organizations in greater detail.

These are among the findings of the third story in The Lund Report’s 2015 review of Oregon hospital finances.

For the third year, The Lund Report is digging into the money and operations of Oregon’s hospitals. In our first two stories, we examined Providence Health and Services and Legacy Health. For this third story in the series, we are looking at Kaiser Permanente in the Portland metro area, Tuality in Washington County, Salem Health in the Willamette Valley, and Asante near Oregon’s southern border.

The figures underpinning these examinations come from multiple sources:

  • Profit, revenue and charity care figures come from audited reports prepared by each hospital and submitted to the Office for Oregon Health Policy & Research.
  • The size and reach of each hospital, as summarized through available beds, and inpatient, outpatient and emergency room figures, are reported by hospitals to the state-mandated Databank program.
  • Executive compensation figures come from the IRS 990 tax forms that all nonprofits are required to file.
  • Additional financial details about hospital chains come from IRS 990 forms and from the systems’ own unaudited reports.

In addition, The Lund Report reviewed Medicare claims data from the American Hospital Directory and hospital debt information from bond databases.

Once we’ve completed our look at the facts and figures, The Lund Report will follow up with stories that tackle different questions about profits, compensation and the cost of caring for the poor.

Next week, we’ll look at Samaritan hospitals

Kaiser Permanente

Kaiser used to consolidate its hospitals financial details alongside its insurance operations, making it hard to get a snapshot of this aspect of the institution. The nonprofit is gradually beginning to reveal details about its Oregon hospitals, but it only began releasing details about its Sunnyside location last year, and the Westside Medical Center site is so new that some figures aren’t available yet. Kaiser is a massive, integrated system of hospitals, insurance plans and medical offices, with nationwide annual operating revenue of $56.4 billion in 2014, $53.1 billion the year before.

George Halvorson, who was CEO of the entire national Kaiser Permanente system until he retired on July 1, 2013, received total compensation of $10.2 million in 2013. The breakdown: $1.3 million in base pay, $7.1 million in bonuses and incentives, $112,605 in retirement and deferred compensation, $33,602 in nontaxable benefits, and $1.6 million in other compensation.

Halvorson was replaced by Bernard Tyson, who had previously been Kaiser’s national chief operating officer. Tyson received total compensation of $4.2 million in 2013 - $1.1 million in base pay, $2.4 million in bonuses and incentives, $111,774 in retirement and deferred compensation, $28,100 in nontaxable benefits, and $682,308 in other compensation.

Andrew McCulloch, Kaiser’s Pacific Northwest president, received total compensation of $1.4 million in 2013: $406,081 in base pay, $598,748 in bonuses and incentives, $361,680 in retirement and deferred compensation, $24,392 in nontaxable benefits and $40,326 in other compensation.

Kaiser Sunnyside Medical Center

Kaiser Sunnyside is the largest hospital in Clackamas County. First opened in 1975, it expanded in 1983 and again in 2007. It’s home to the Northwest Center for Heart and Vascular Care, and is the center for most of Kaiser’s cancer care, neurosurgery and most of the system’s non-emergency inpatient surgeries in the region.

Finances, year 2013:

Profit: $10.1 million, down 78.7 percent from the year before.

Net patient revenue: not reported.

Reported charity care charges: $7.7 million, up 0.8 percent

Profit margin: 1.9 percent, compared to 8.8 percent a year earlier.

Size and scope, as of 2013:

Available beds: 269.

Inpatient days: 67,476.

Emergency department visits: 46,130.

Outpatient visits: 60,993.

Kaiser Westside Medical Center

Built at a cost of $344 million, Kaiser Westside Medical Center opened in Hillsboro in August 2013 – which means it will be another year before full-year financial details are available for the hospital. It opened with 421,000 square feet and room to grow, with 122 private rooms to start and capacity to go up to 240 rooms later on.

Finances, year 2013: Not available.

Size and scope, as of 2013:

Available beds: 122.

Inpatient days: 8,551.

Emergency department visits: 7,327.

Outpatient visits: 10,970.

Salem Health

Salem Health operates Salem Hospital, West Valley Hospital, a rehab center, and the Willamette Health Partners network of clinics. Salem Health ended its 2012-2013 fiscal year with $565.96 million in net assets, up from $504.5 million a year earlier. Its revenue after expenses was $35.3 million in FY13, up from $10.6 million in FY12.

Salem Health has made a series of bold moves over the past year, severing a contract with longstanding insurer Regence BlueCross BlueShield, signing a letter of intent to partner with OHSU, and joining forces with six other hospital systems within the fledging Population Health Alliance. It also has a very close alliance with Moda Health, giving it preferential rates compared to other health plans.

Norman Gruber, president and CEO of Salem Health and Salem Hospital, received total compensation of $1.2 million in the fiscal year that ran from Oct. 1, 2012 through Sept. 30, 2013. The breakdown: he received $801,372 in base pay, $93,499 in bonuses and incentives, $216,250 in retirement and deferred compensation, $41,173 in nontaxable benefits and $14,126 in other compensation.

Salem Hospital

With the busiest emergency room in Oregon by far, Salem Hospital also provides a range of other services, reporting 3,005 births in 2013, along with more than 1.1 million lab procedures, and 13,109 surgeries. It was founded in 1896.

Finances, year 2013:

Profit: $61.4 million, up 94.2 percent from the year before.

Net patient revenue: $531.8 million, up 6.9 percent.

Reported charity care charges: $56.3 million, up 26.98 percent.

Profit margin: 10.3 percent, compared to 5.8 percent a year earlier.

Size and scope, as of 2013:

Available beds: 390.

Inpatient days: 98,224.

Emergency department visits: 93,337.

Outpatient visits: 336,495.

West Valley Hospital

With just six staffed beds, The Dalles-based West Valley is the smallest hospital in the state, but is busier than larger institutions that serve some rural communities.

Robert Brannigan, chief administrative officer of West Valley, received total compensation of $345,071 in FY 2012-13: $245,979 in base pay, $36,966 in bonuses and incentives, $30,130 in retirement and deferred compensation, $25,086 in nontaxable benefits, and $6,910 in other compensation.

Finances, year 2013:

Profit: $987,524, down 25.1 percent from the year before.

Net patient revenue: $20.5 million, up 5.3 percent.

Reported charity care charges: $2.2 million, up 11.9 percent.

Profit margin: 4.7 percent, compared to 6.5 percent the year before.

Size and scope, as of 2013:

Available beds: 6

Inpatient days: 536.

Emergency department visits: 12,074.

Outpatient visits: 70,283.

Tuality Healthcare

Founded in 1918, Tuality Healthcare is a nonprofit with a health plan, an education center and two hospitals, located in Forest Grove and Hillsboro. It employs 1,400 people overall. Though Tuality’s two hospitals have different names, buildings and locations, they report their financial results as a single entity.

Richard Stenson, president and CEO of Tuality Healthcare, received total compensation in the 2012-13 fiscal year of $934,853. His base pay was $845,124, and he also received $89,729 in retirement and deferred compensation. He has since retired.

Finances, year 2013:

Profit: $1.17 million, compared to a net loss of $1.13 million the year before.

Net patient revenue: $149.5 million, down 3.2 percent.

Reported charity care charges: $12.2 million, up 26.4 percent.

Profit margin: 0.71 percent, compared to a negative 0.68 percent margin a year earlier.

Size and scope, as of 2013:

Available beds: 148.

Inpatient days: 20,894.

Emergency department visits: 39,053.

Outpatient visits: 252,546.

Asante

Medford-based Asante is a nonprofit healthcare company that added its third hospital – in Ashland – through a merger announced in 2013. It also operates a number of clinics along the Interstate 5 corridor in southern Oregon. With 4,600 employees, Asante serves a population base of 580,000 people in southern Oregon and northern California.

Asante ended its 2012-13 fiscal year with $503.6 million in net assets, up from $454.6 million a year earlier. Its revenue less expenses was $52.56 million in FY13, virtually unchanged from $52.23 million in FY12.

Roy Vinyard, president and CEO of Asante, received total compensation of $1.1 million in fiscal year 2013: base pay of $620,228, bonuses and incentive pay of $126,192, retirement and deferred compensation of $200,096, nontaxable benefits of $44,681, and other compensation of $84,916.

Asante Ashland Community Hospital:

From its founding in 1907 until the mid-1990s, Ashland Community Hospital was owned and run by the city. In the 1990s, it became a separate, private nonprofit, but the land remained city profit and the hospital paid a token rent. In 2013, financially struggling Ashland hospital reached an agreement to merge into the Asante family.

Finances, year 2013:

Net loss: $3.6 million, compared to a $3.3 million net loss in 2012.

Net patient revenue: $43.7 million, down 8.5 percent from the year before.

Reported charity care charges: $841,463, down 41.5 percent.

Profit margin: negative 8.1 percent, compared to negative 6.9 percent a year earlier.

Size and scope, as of 2013:

Available beds: 37.

Inpatient days: 4,540.

Emergency department visits: 7,249.

Outpatient visits: 61,429.

Asante Rogue Regional Medical Center

Founded in 1958, Medford-based Rogue Regional Medical Center is Asante’s flagship hospital. It completed a $6 million expansion in 2011, and hosts the region’s only neonatal intensive care unit.

Scott Kelley, CEO of Rogue Regional Medical Center, received total compensation of $481,167: $290,180 in base pay, $34,183 in bonuses and incentives, $86,464 in retirement and deferred compensation, $30,518 in nontaxable benefits, and $39,822 in other compensation.

Finances, year 2013:

Profit: $24.1 million, down 64.3 percent from a year before.

Net patient revenue: $380.2 million, up 1.3 percent.

Reported charity care charges: $38.s million, down 1.9 percent.

Profit margin: 6.1 percent, compared to 16.09 percent a year earlier.

Size and scope, as of 2013:

Available beds: 307.

Inpatient days: 70,339.

Emergency department visits: 31,973.

Outpatient visits: 377,497.

Asante Three Rivers Medical Center

Grants Pass-based Three Rivers Medical Center was designed with holistic healing principles in mind. Patient rooms are secluded, and the hospital’s healing garden aims to promote tranquility. Last year, a $30 million, 90,000-square-foot outpatient center opened next door to the hospital on its campus.

Three Rivers CEO Win Howard received total compensation of $491,874 in FY 2013: $264,762 in base pay, $52,736 in bonuses and incentives, $99,034 in retirement and deferred compensation, $40,419 in nontaxable benefits and $34,923 in other compensation.

Finances, year 2013:

Profit: $3.3 million, down 77.3 percent from a year before.

Net patient revenue: $124.05 million, down 2.9 percent.

Reported charity care charges: $23.9 million, up 5.6 percent.

Profit margin: 2.6 percent, compared to 10.3 percent a year before.

Size and scope, as of 2013:

Available beds: 107.

Inpatient days: 22,014.

Emergency department visits: 31,940.

Outpatient visits: 248,818.

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