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Published: Sunday, 12/19/2004

A 'war for talent' leads to big salary packages for execs

BY LUKE SHOCKMAN
BLADE STAFF WRITER

Wanted: Executives to oversee multimillion dollar health care organizations. Stress likely. Pay is good. Very good.

That's the message being spread by hospitals across the country, with one health analyst calling job recruitment efforts a "war for talent." That battle has led to a predictable result: Generous pay and benefit packages for leaders of nonprofit hospitals and health systems, and northwest Ohio is no exception.

Alan Brass, president and chief executive of ProMedica Health System, was again the leader among Toledo area hospitals and health systems with total compensation last year of $1,341,458, up only $1,589 from 2002. That total includes salary, incentives, and bonuses. A large part of Mr. Brass' income was retirement and health benefit contributions of $378,170. He's guaranteed to get some of that money, while an undetermined portion is based on meeting certain requirements.

Coming in second again among the locals was Steve Mickus, president and CEO of Mercy Health Partners. Mr. Mickus' total compensation last year was $1,169,784, which includes salary, other incentives, and retirement contributions. Mercy officials say they changed their executive compensation accounting methods last year, which they say artificially inflates their compensation totals. That makes it difficult to compare to previous years. Of Mr. Mickus' total compensation last year, $362,241 was retirement money set aside for Mr. Mickus if he meets certain company requirements.

Mercy's parent company is Cincinnati-based Catholic Healthcare Partners, which owns 32 hospitals and nine other regions besides its Mercy operations in northwest Ohio and had net revenues in 2003 of $2.9 billion. Last year its president and CEO, Michael Connelly, had a total compensation package worth $2,341,982. Like Mr. Mickus, Mr. Connelly's compensation includes retirement money for which he qualifies but has to meet certain requirements to get. Of his total package, $720,317 of the amount falls into that category.

Nationwide, compensation packages for hospital presidents typically run anywhere from $300,000 to $450,000 or more depending on the size of the hospital, said Tom Dolan, president and CEO of the American College of Healthcare Executives. Pay packages for health system leaders are even higher, with compensation ranging from $500,000 to $1 million or more.

"It's like any other field, the best people are always sought after," Mr. Dolan said.

Donald Wegmiller, chairman of the Chicago-area based Clark Consulting Healthcare Group, agreed, adding that the "war for talent" for leaders of health systems has soared in the last decade. He said few executives have backgrounds in running large health organizations, so those who do are highly sought.

"Of the 20 major large-scale health systems that recruited to find a CEO in the last two years, none were able to recruit a sitting CEO, they all had to go with someone who had never been a [health system] CEO before," Mr. Wegmiller said.

For the guy making just enough to get by, the salaries might seem a little steep. And it appears Congress and the Internal Revenue Service agree.

Both have begun investigating the salaries paid to executives of nonprofits to see if the high salaries are justified. The target is all nonprofits, not just hospitals and health systems. Mr. Dolan and Mr. Wegmiller said the public shouldn't assume a high salary is inappropriate just because someone is running a nonprofit hospital or health system.

"These are some of the largest employers in their communities, and they're employing a great number of people," Mr. Wegmiller said.

"And these [health care] organizations generally pay less than comparable organizations in other industries."

Contact Luke Shockman at: lshockman@theblade.com or 419-724-6084.



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