July 8, 2013

Amid cuts, Maine hospitals still paying million dollar salaries

Critics say medical facilities plead poverty and lay off workers but continue to compensate executives and surgeons with substantial payouts.

By J. Craig Anderson canderson@pressherald.com
Staff Writer

Ten hospital employees in Maine were paid more than $1 million in 2011, including one former executive who received more than $2 million, according to the latest financial data released by the Internal Revenue Service.

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Maine Medical Center in Portland, which announced a hiring freeze in the spring, began offering voluntary retirement buyouts to 400 employees about two weeks ago, citing a $13.4 million operating loss in the first half of its fiscal year.

Maine Sunday Telegram file photo/John Patriquin

Critics say such high salaries contribute to Maine's economic woes and restrict access to affordable health care, just as the state's hospitals are about to receive an estimated $484 million in state and federal funds.

Six of the executives and physicians who made $1 million or more work for Maine Medical Center in Portland or its parent company, MaineHealth.

Overall, the average salary for Maine's top hospital and health care group executives was slightly higher than the national average, according to a Maine Sunday Telegram analysis of the data, which were released this spring.

While industry representatives say Maine hospitals still pay less than their counterparts throughout the Northeast, some state lawmakers and medical professionals have criticized the level of compensation, saying it contributes to the high cost of health care in Maine.

That criticism comes after Maine Medical Center, which announced a hiring freeze in the spring, began offering voluntary retirement buyouts to 400 employees about two weeks ago, citing a $13.4 million operating loss in the first half of its fiscal year. Other hospitals in Maine have also had financial problems recently: Eastern Maine Medical Center in Bangor announced plans to eliminate 17 positions in its laundry, and Parkview Adventist Medical Center in Brunswick announced it would close its intensive care unit and eliminate 16 positions.

The state has also weathered a long battle among its political leaders over how and when to pay about $184 million in overdue MaineCare subsidies to hospitals for 2009 through 2012. Once paid, the federal government will contribute another $300 million to Maine hospitals. Gov. Paul LePage signed a bill in June to pay the funds.

Presidents and chief executives at 36 of Maine's 39 nonprofit hospitals and their parent organizations earned an average base salary of $339,620 during the 2011 fiscal year, which for hospitals began in September 2010.

That's about 1.3 percent higher than the national average of $335,300 for the same period, according to a survey of more than 1,250 hospitals by Philadelphia-based consulting firm Hay Group.

When bonuses and other compensation were added to the equation, the average pay for a top Maine hospital executive in fiscal 2011 was $480,328.

Three Maine hospitals are not required to report financial data to the IRS: Cary Medical Center in Caribou, Mayo Regional Hospital in Dover-Foxcroft, and New England Rehab Hospital in Portland. Those hospitals are covered by an exemption for fully or partly government-run institutions.

Most nonprofit organizations, including hospitals, are required to fill out a financial disclosure form each year with the IRS, known as a Form 990. The most recently available forms are for the 2011 fiscal year.

Sen. Geoffrey Gratwick, D-Bangor, Senate chairman of the Legislature's Insurance and Financial Services Committee, said Mainers can't afford to continue paying the state's hospital executives the kind of money they currently receive.

Because all of Maine's hospitals operate as nonprofit organizations, and because salaries factor into the cost of charity care and Medicaid, they have an impact on the cost to all taxpayers, not just those receiving care, said Gratwick, who is a practicing physician in Bangor.

"High medical costs in Maine are destroying the Maine economy," he said.

But not everyone believes the top salaries at Maine hospitals are too high.

Steven Michaud, president of the Augusta-based Maine Hospital Association, said his organization's data consistently show that hospital CEOs in Maine earn about 6 percent less than average for the Northeast region.

(Continued on page 2)

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