Documente Academic
Documente Profesional
Documente Cultură
Table of Contents
3
EXECUTIVE SUMMARY
11
11
13
19
23
RECOMMENDATIONS
25
ENDNOTES
28
APPENDIXES
Executive Summary
THE URGENT NEED FOR SAFER NEW
YORK NONPROFIT HOSPITALS
The deaths of as many as 400,000 patients in US hospitals
each year are preventable, according to a widely reported
study in the Journal of Patient Safety in 2013. Patient
care understaffing is one of the biggest contributors to
preventable hospital deaths and other serious hospital
medical complications. More hospital-acquired infections,
medication errors, avoidable readmissions and other harms
result when nurses and aides care for two to three times too
many patients as they should. Studies in major journals such
as the Journal of the American Medical Association establish
that hospitals with higher nurse-to-patient ratios have
lower mortality rates than hospitals with lower nurse-topatient ratios.
New Yorkers can hardly miss advertisements trumpeting
a hospitals top heart center or relating the heartwarming
story of a patient saved by exemplary care. But the
unfortunate reality is that New Yorks nonprofit hospitals
perform significantly worse overall than hospitals nationally
on key indicators of quality and patient safety. So it is
especially urgent that they end understaffing. They could
make enormous progress in doing so by redirecting at least
$300 million a year now wasted on exorbitant executive
compensation and needless advertising to buttressing
staffing levels in direct care units.
18%
63%
2.4%
of patients
were harmed by
medical care
of the injuries
were preventable
were serious
enough to
have caused or
contributed to
the patient death
73
70
60
50
63
58
48
45
44
40
50
35
30
30
33
26
20
14
10
0
% w/VBP Bonus
% w/VBP Penalty
US
V
alue Based Purchasing Program (VBP). Medicare
reimbursements are initially reduced by 1.5 percent
and then are adjusted upward based on quality of
care metrics, including the hospitals performance
on medical procedures, mortality rates and patient
satisfaction, as measured by survey responses. A bonus
is paid for better than average performance.
On average, New York hospitals performed worse than
US hospitals on the VBP. For FY 2015, New York is
among the bottom ten states in the share of hospitals
receiving a bonus and among the top ten states in
the share receiving a penalty. According to a Kaiser
Health News analysis, the average bonus nationally is
0.44 percent and the average penalty is 0.30 percent.5
According to an analysis of CMS data, the average
bonus for New York hospitals is only 0.30 percent and
the average penalty is 0.33 percent.
R
eadmissions Reduction Program (RRP). A
readmission may result from a healthcare-associated
infection or other adverse medical event that becomes
apparent soon after discharge. Up to three-quarters of
readmissions are believed to be preventable.6 A penalty
of up to three percent of Medicare inpatient payment
claims can be imposed based on 30-day readmission
rates of patients initially admitted for five conditions:
acute myocardial infarction, heart failure, pneumonia,
% w/HAC Penalty
NY
1%
22%
A
B
20%
C
D
43%
35%
A
B
C
D
E
27%
1 0 Communications Workers of America District One PAYING FOR WHAT DOESNT COUNT MAY 2015
Total
Number $ million
15
27.7
12
22.2
5
5
5
4
4
3
10.3
9.9
8.6
7.0
5.7
4.9
3
1
3
2
3.9
3.9
3.9
2.6
2
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
2.2
2.1
1.8
1.8
1.9
1.8
1.8
1.6
1.6
1.5
1.5
1.5
1.4
1.4
1.3
1.3
1
1
1
1
1
1
1
1.3
1.3
1.2
1.2
1.1
1.1
1.1
1
1
1
1
1
1
92
1.1
1.1
1.0
1.0
1.0
1.0
152.827
11
Table 2: CEO COMPENSATION AT SELECTED NONPROFIT HOSPITALS WITH LESS THAN $250 MILLION
IN REVENUE IN 2012.
2012 revenue,
$ millions
2012 CEO
compensation
Compensation per
$10,000 of revenue
100.5
$461,839
$45.95
44.5
$468,682
$105.33
Hospital
County
Cortland
Suffolk
Kings
201.7
$1,288,386
$63.87
Westchester
166.3
$1,620,41529
$97.66
Niagara
89.3
$764,578
$85.62
Fulton
95.9
$448,825
$50.97
New York
219.7
$986,407
$44.89
Dutchess
74.2
$449,005
$60.51
Westchester
241.6
$1,550,598
$64.34
Westchester
217.4
St Marys Healthcare
Montgomery
Southampton Hospital
Westchester Square Medical Center
30
$85.49
149
$813,087
$54.43
Suffolk
121.0
$596,354
$49.28
Bronx
69.3
$490,070
$70.71
$1,854,678
1 2 Communications Workers of America District One PAYING FOR WHAT DOESNT COUNT MAY 2015
13
$3 million
to a CEO in 2012.
$1,200,000
$1,000,000
$800,000
$600,000
$400,000
$200,000
ra
.F
St
1 4 Communications Workers of America District One PAYING FOR WHAT DOESNT COUNT MAY 2015
al
He
C
TL
St
.P
et
er
th
Ho
Ne
sp
tw
or
it a
yn
Ro
l,
it a
sp
Ho
is
nc
s
er
st
Si
sl
it a
sp
Ho
it y
ar
Ch
of
n
it a
ar
m
Sa
er
Ce
al
ed
M
al
He
da
ei
On
nt
er
nt
ic
re
ca
th
he
tc
Du
rn
he
rt
Ce
sp
Ho
ss
lH
ia
or
em
M
s
No
ne
Jo
ta
pi
os
sp
Ho
nd
la
gh
Hi
it a
ta
pi
os
lH
ra
va
ne
Ge
it a
l
ta
pi
Ge
em
M
it y
un
m
m
Co
ne
or
ia
sp
Ho
gs
r in
Sp
on
if t
Cl
lH
.&
n
ur
pb
He
nto
ax
Cl
os
Cl
Ho
in
sp
ic
$0
$1 million
tr
.C
M
tH
el
ht
ev
Hg
os
W
yc
ko
ff
Ro
e
suk
.L
ed
os
sp
Ho
ll
wa
rn
Co
e
s
St
uk
.L
St
p.
p.
em
l
H
M
e
m
Ro
et
M
k
Yo
r
w
Ne
os
it a
sp
st
di
ho
Ba
g.
Im
y
ar
M
Ho
tH
et
ss
sp
Ho
p.
os
Ct
ed
M
.B
sp
ca
ai
m
Ja
y
w
a
rn
Ho
nc
li a
Al
th
al
He
Go
od
Gl
Sa
en
ar
Co
it a
ve
n-
Ho
Su
sp
f fe
it a
p.
os
.H
em
M
a
bi
m
lu
Co
av
kh
oo
Br
Be
th
Is
en
ra
el
em
ed
.H
.C
os
tr.
p.
$0
S
t Lukes Cornwall Hospital paid its CEO $42.68 per
$10,000 of revenue, exceeding the $27.36 per $10,000
revenue paid to the CEO of its neighbor, Orange
County Medical Center; and
R
ome Memorial Hospital paid its CEO $30.02 per
$10,000 of revenue versus the $22.91 per $10,000 in
revenue paid to the CEO of St. Elizabeth Medical
Center, its Oneida County neighbor.
Hospital trustees have a duty to provide quality care
As with all corporations, executive compensation is
determined by a board. However, New York nonprofit
hospitals are distinguishable from for-profit corporations
in that they are incorporated with the specific principal
purpose of delivering quality health care to their
communities. This imposes a duty on hospital trustees to
inquire whether there are practices in place that address
deficiencies in patient care and to remedy them.47 For this
reason, an executive compensation policy that puts revenue
growth ahead of patient care would be incompatible with
the fiduciary duty of that hospitals board.
15
COMPENSATION POLICIES
DISCOURAGE SPENDING ON
PATIENT SAFETY AND
HOSPITAL QUALITY.
To determine compensation,
follow the leader
Most hospitals include a brief explanation of
executive compensation determination process
in their IRS Form 990 returns. Based on forms
submitted by New York nonprofit hospitals, most base
executive compensation primarily on what is paid by
comparable hospitals or hospital systems. Hospital
boards typically empanel a compensation committee
that engages a consultant to perform a study of
executive compensation at comparable hospitals.
CEO compensation is then often targeted at the 50th
percentile, which is construed to satisfy the IRSs
rebuttable presumption of reasonableness test for
nonprofit executive compensation.
In addition to perpetuating unjustifiably high
compensation, this herd mentality helps to explain
why compensation48 can remain very high despite poor
performance on safety and quality indicators.
A number of hospital compensation policies cited
hospital financial results as a determinant.49 In fact,
among the 70 percent of nonprofit hospitals that
paid executives a bonus/incentive in 2012, several
explicitly tied it to the generation of a surplus (e.g.,
Westchester Square, New York Methodist, and New York
Hospital Medical Center). Among New York nonprofit
hospitals with more than $25 million in revenue, only
13 identified patient safety, hospital quality, or
customer satisfaction as factors to be considered,
and only in conjunction with financial results.50
There is no way to tease out the degree to which an
improvement in hospital quality or safety could lead, if
at all, to a bonus or incentive payment.
Moreover, this strong emphasis on financial
performance implicitly discourages investments that
would improve medical outcomes. Because they
concomitantly increase expenses as they reduce
revenue, investments that improve patient safety could
cost a CEO his or her bonus and possibly also result in
less base compensation.
The inherent financial disincentive to improve medical
outcomes was explained by a 2013 Journal of the
American Medical Association study that analyzed
post-surgical records of 34,256 people, of whom 1,820
had one or more avoidable complications, such as
blood clots, pneumonia or infected incisions.51 The
median length of stay for patients with complications
quadrupled to 14 days, and hospital revenue averaged
$30,500 more than for patients without complications
($49,400 versus $18,900). As the New York Times
reported, Hospitals make money from their own
mistakes because insurers pay them for the longer
stays and extra care that patients need to treat surgical
complications that could have been prevented.52
Rebuttable presumption is
the equivalent of a school-aged
child defending their actions
by saying, Everyone else is
doing it. Its silly, and its time
for Congress to step in.
Reasonable compensation can attract good
managers
The claim that the high compensation levels at New York
nonprofit hospitals are necessary to attract qualified talent
is further refuted by the patient care and safety records
of New York City Health and Hospitals Corporation
(HHC) hospitals. While paying executives reasonable
compensation, HHC hospitals averaged better performance
on hospital quality measures than New York nonprofit
hospitals overall.
The HHC is composed of 11 acute care general hospitals,
four skilled nursing facilities, six diagnostic and treatment
centers, a home healthcare agency and more than 70
community-based clinics. HHC also operates a managedcare health plan. The HHC President/Executive Director
was paid $366,836 in 2012,53 a small fraction of the
$1 million to $4 million in compensation received by so
many New York nonprofit hospital system CEOs.
HHCs 11 acute care hospitals are large institutions with
revenues as high as $783 million. The responsibilities
of their executive directors are at least comparable
to those of their nonprofit hospital peers, but HHC
executive directors are paid much less, as illustrated by the
comparison of compensation at two HHC hospitals and
two New York City nonprofit hospitals with comparable
revenue shown in Figure 6.54
Despite paying executives less, HHC hospitals performed
as well as, and in some cases better than, well-regarded
New York nonprofit hospitals on Medicare hospital
quality incentive programs. As shown in Table 3, HHCs
average Medicare readmissions penalty for FY 2015 is
0.61 percent, better than both the US average of 0.63
percent and the New York State average readmissions
penalty of 0.73 percent.
1 6 Communications Workers of America District One PAYING FOR WHAT DOESNT COUNT MAY 2015
Bronx-Lebanon Hospital
$611 million
17
Net VBP
RRP
adjustment Penalty
Harlem Hospital
0.48%
-0.12%
0.16%
-0.53%
0.07%
-0.52%
Lincoln Hospital
0.02%
-0.48%
Metropolitan Hospital
-0.27%
-0.30%
-0.22%
-0.39%
Queens Hospital
0.18%
-0.85%
-0.41%
-0.27%
-0.33%
-0.73%
Woodhull Hospital
-0.23%
-1.06%
-0.02%
-1.49%
HHC AVERAGE
-0.05%
-0.61%
1 8 Communications Workers of America District One PAYING FOR WHAT DOESNT COUNT MAY 2015
88%
64%
51%
Sisters of Charity
51%
57%
50 %
55%
59%
Mercy Hospital
54%
76%
76%
50%
60%
Kaleida Health
88%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
19
F
ew medical consumers can assess hospital advertising.
How would a prospective inpatient confirm the claim
that a hospital has the best open heart surgery?
H
ospital ads rarely educate. Hospital ads featuring
patients who talk about amazing recoveries and
beating cancer may inspire, but do not inform.
H
ospital advertising sometimes exaggerates. Winthrop
University Hospital touts its knife-less surgery as the
biggest advance in prostate cancer treatment in over a
decade. (See Winthrop ad at Appendix B.) Says who?
A professor of urology and urologic oncologist writing in
Forbes Magazine gave this ad an F, terming it, one of
the most egregious examples of poor copy and obvious
deceptive statements. 62
Th
e target audience for hospital advertising is
often physicians. Paul Levy, President and CEO of
Beth Israel Deaconess Medical Center in Boston,
forthrightly stated that hospitals advertise to respond
to pressure from your doctors and show them that you
support their programs. 63
Hospital advertising is also counterproductive:
D
emand for hospital care is inelastic, with a fixed pool
of potential patients. Unlike advertising for consumer
goods, hospital advertising cannot persuade otherwise
healthy people to purchase care that they do not need.
Therefore, if advertising is effective it merely siphons
patients from other hospitals, largely at public expense.
H
ospital advertising begets more hospital advertising
and fuels the medical arms race. When a hospital
advertises its cancer center or cardiac surgery program,
its competitors are compelled to advertise theirs, lest
they lose market share. Likewise, when one hospital
advertises new, multi-million dollar state-of-the art
diagnostic or treatment equipment, other hospitals are
compelled to purchase it as well to remain competitive.
As Atlantic Magazine recently put it:
Why are so many hospitals eagerly acquiring
and aggressively marketing such equipment? The
rationale behind their proliferation lies less in
medical evidence than in marketing campaigns,
where such sophisticated pieces of equipment seem
to define the state-of-the-art. 64
No public purpose undergirds any of these rationales and,
therefore, no basis exists for public monies to underwrite
multi-million dollar advertising campaigns.
2 0 Communications Workers of America District One PAYING FOR WHAT DOESNT COUNT MAY 2015
Lobbying
Three major hospital associations represent the interests
of New York hospitals in Washington and in Albany:
the Greater New York Hospital Association (GNYHA),
comprising nearly 250 hospitals;65 the Healthcare
Association of New York State (HANYS); and the Iroquois
Healthcare Alliance, representing 53 hospitals and health
systems in 32 upstate counties. The three associations are
funded by hospital fees.
They may not run hospitals, but their executives were paid
as much as administrators of the largest hospital systems
in 2012:
Th
e top five executives of the Greater New York
Hospital Association were compensated a total of
$10.924 million.66 From 2011 to 2012, their base
compensation and bonus/incentive increased 15
percent, from $6.710 million to $7.740 million.
Th
e top five executives of the Healthcare Association
of New York State (formerly the Hospital Association
of NYS) received a combined $2.261 million,
including $952,217 for the president and $434,807 for
a former executive vice-president.67
Th
e president of the Iroquois Healthcare Alliance was
paid $466,638.68
In addition to underwriting hospital association advocacy,
New York nonprofit hospitals reported spending
$7.5 million to lobby public officials in 2012. The three
largest spenders were New York and Presbyterian Hospital,
$822,578; Montefiore Medical Center, $756,468; and NYU
Hospitals Center, $404,988. Some hospitals noted that a
portion of their lobbying spending went to the Greater
New York Hospital Association, which spent $459,000
on lobbying. To be sure, hospitals lobby to preserve and
increase Medicaid and Medicare payments, but also against
legislation to ensure that hospitals assign adequate numbers
of patient care staff.
21
2 2 Communications Workers of America District One PAYING FOR WHAT DOESNT COUNT MAY 2015
Recommendations
In 2012, more than $300 million would have been
available for safe staffing had hospitals paid their executives
reasonable, competitive compensation and stopped wasting
millions of dollars on advertising. This can happen if
hospitals voluntarily reduce unnecessary advertising and
New York State enacts:
Th
e Safe Staffing for Quality Care Act. This
proposed New York State legislation would set
licensed acute-care nurse-to-patient ratios at
reasonable and feasible minimums. Such a statute
was supported by the Journal of American Medical
Association in its 2002 study documenting the harmful
impact of understaffing on patients.
cap on hospital executive compensation. A
A
compensation cap of: (i) $450,000 at the hospitals
with revenues exceeding $1 billion; (ii) $400,000 at
hospitals with revenues between $400 million and $1
billion; and (iii) $350,000 at hospitals with less than
$400 million in revenue would be consistent with the
compensation of HHC hospital executive directors.
These caps would cover the aggregate of base salary
and bonus, severance pay, deferred compensation
that was earned, and any employer contributions to a
retirement plan for executives at hospitals that receive
public funds. If such caps had been in place in 2012,
nonprofit hospitals would have saved at least $190
million that could have been reinvested in patient care.
A
transparency law requiring disclosure of
the factors used to determine all elements of
compensation, including base compensation,
bonus/incentive compensation, severance payments,
contributions to deferred compensation plans,
and their weight. Armed with such information, an
informed public could press for compensation to be
based first and foremost on what counts most: patient
safety and hospital quality.
The need for transparency was underscored in
2013 when Kaiser Health News/ABC News tried
to investigate hospital executive pay at nonprofit
institutions. Reporters asked dozens of hospitals for
CEO employment contracts and for information
regarding the factors used to determine bonuses or
23
2 4 Communications Workers of America District One PAYING FOR WHAT DOESNT COUNT MAY 2015
Endnotes
1
15
16
17
18
19
20
Aiken, et al., op. cit. Hospital Nurse Staffing and Patient Mortality.
See also, Increase in nurse numbers linked to better survival
rates in ICU, C. Duffin, Nursing Standard (2014). The study
found that increasing RN staffing improved survival rates because
nurses spent more time with critically ill patients than other
healthcare professionals and were therefore more likely to detect
early signs of deterioration.
21
22
23
24
25
10
11
12
13
25
27
28
The CEO of NYU Hospitals Center was also dean of the medical
school. His compensation included $800,000 in other reportable
compensation and $640,652 in deferred compensation.
29
30
31
32
33
Barbara Benson, SERPs up! Hospital execs win big, Crains New
York Business, March 18, 2012.
34
35
36
37
38
39
40
Karen E. Joynt, MD, MPH; Sidney T, Le, BA; E. John Orav, PhD;
Ashish K. Jha, MD, MPH, Compensation of Chief Executive
Officers at Nonprofit US Hospitals, JAMA: Internal Med 174
(January 2014): 617-67. The study found no significant
association between performance on process quality, risk-adjusted
mortality, or readmission rates and CEO compensation.
41
42
43
How safe is your hospital? Our new ratings find that some are
riskier than others, Consumer Reports, August 2012.
44
45
46
47
48
49
2 6 Communications Workers of America District One PAYING FOR WHAT DOESNT COUNT MAY 2015
51
52
53
55
56
57
58
59
61
62
63
As reported in Health Beat, August 14, 2008. Dr. Levy also said,
There is no evidence that ads work in creating business, but
we need to keep our doctors happy. Accessed at http://www.
healthbeatblog.org /2008/08/hospital-ads-th.html
64
65
GNYHA members are primarily in New York but some members are
also in New Jersey and Connecticut.
66
67
68
69
54
60
27
Appendix A
Table A1: VALUE BASED PURCHASING (VBP) & READMISSIONS REDUCTION PROGRAM (RRP)
PERFORMANCE OF NEW YORK NONPROFIT HOSPITALS IN BOTTOM QUARTILE WITH REVENUES
EXCEEDING $25 MILLION FY 2015
Hospital
County
RRP penalty
New York
-0.29%
-1.79%
Suffolk
-0.41%
-1.56%
Columbia
-0.35%
-1.39%
Nassau
-0.53%
-1.43%
Good Samaritan-Suffern
Rockland
-0.45%
-1.33%
Ulster
-0.44%
-1.44%
Queens
-0.40%
-1.33%
Otsego
-0.47%
-0.91%
Kings
-0.39%
-1.07%
Oneida
-0.47%
-0.99%
Orange
-0.45%
-1.13%
New York
-0.25%
-1.23%
Kings
-0.29%
-1.50%
Table A2: VALUE BASED PURCHASING AND READMISSIONS REDUCTION PERFORMANCE OF NEW
YORK NONPROFIT HOSPITALS IN TOP QUARTILE WITH REVENUES EXCEEDING $25 MILLION FY 2015
Hospital
County
RRP penalty
Claxton-Hepburn
Clifton Springs Hospital and Clinic
St. Lawrence
0.85%
-0.09%
Ontario
0.63%
-0.15%
Madison
1.47%
-0.05%
Ontario
0.26%
-0.02%
Highland Hospital
Monroe
0.42%
-0.25%
Allegany
0.93%
-0.19%
Dutchess
0.39%
-0.03%
Madison
0.25%
-0.17%
Jefferson
0.62%
-0.17%
Erie
0.48%
-0.10%
Nassau
0.37%
0.00%
Albany
0.40%
-0.03%
Cattaraugus
0.31%
-0.07%
2 8 Communications Workers of America District One PAYING FOR WHAT DOESNT COUNT MAY 2015
Appendix B
29
3 0 Communications Workers of America District One PAYING FOR WHAT DOESNT COUNT MAY 2015
31
3 2 Communications Workers of America District One PAYING FOR WHAT DOESNT COUNT MAY 2015
33