CHAPEL HILL, N.C. — From 2010 to 2021, executives at North Carolina’s nine largest nonprofit hospital systems brought home more than $1.75 billion dollars in compensation, even as healthcare costs continued to rise.
Most nonprofit hospital system CEOs doubled their pay in just five years. Some CEOs got even larger raises, such as Atrium Health’s CEO, who saw his pay increase by 473 percent in six years.
At the same time, registered nurses’ wages rose about 15 percent from 2010 to 2019. Vivian Ho, a professor at Rice University and one of the researchers that worked on the report, finds it concerning because nonprofit hospitals get tax exemptions.
“They’re exempted,” Ho says “And the notion is that they’re supposed to be instead not necessarily looking to maximize profits, but to be helping the community.”
In 2020 alone, nonprofit hospitals saved $1.8 billion in tax breaks all while appearing to be billing poor patients more.
A report from the NC Treasurer’s office found that in 2019, some nonprofit hospitals billed more than $149 million to patients who should have qualified for discounted or free care.
Steven Greene, an expert in public policy, says that executives are rewarded for increasing revenue, not for the care they provide.
“The metrics they use are financial metrics,” Greene says “So they are rewarded for financial metrics. They are not rewarded for like, you know, how many low income people did you help out get care who otherwise wouldn’t have?”
Another issue raised by the report is transparency about executive pay. Under current law, some hospitals, like UNC Health and Atrium, are able to hide their tax filings from the public. Nonprofit hospitals are also able to keep their executive contracts private.
Ge Bai, a professor of health policy and another researcher who worked on the report, says that it is important for the public to know how much executives are paid.
“It’s important for that information to be disclosed, revealed to the public, so the public can scrutinize not only the executive pay, but also the mechanism that generates executive pay,” Bai says.
North Carolina Healthcare Association, a lobbying group for hospitals, declined my request for an interview. In a statement given to me, they stressed the size and complexity of hospital systems, and said: “To compete for and retain executive talent, their executive compensation packages must match those of similar-sized organizations.”
Due to this size and complexity, Greene says that nonprofit hospitals should not be thought of the same way as other, smaller nonprofits.
“The incentives for their leaders is, yeah, to provide health care, but ultimately for their executives, the incentives are to grow the business, to grow revenues like any large multimillion dollar organization,” Greene says.
The Treasurer’s report calls for legislative action that would increase transparency around executive pay. Bai says another solution is to require hospitals to provide more community care.
“There are other states, I think, that are legislating minimum amounts of community benefit that must be provided by not-for-profit hospitals,” Ho says.
But, Greene says any legislative action would be hard fought because of how hard hospital executives would likely fight against it.
“It’s not hard to imagine a better set of public policies that would make this better for the residents of North Carolina, but also to recognize probably how hard it would be to get those,” Greene says.