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

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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

Given the difficulty of running a hospital in a rural state with so many older residents and a relatively low percentage of Medicare reimbursement, he said Maine's top hospital executives have more than earned their current salaries.

"I'd say my CEOs are doing an incredible job given the environment and deserve every penny they get," Michaud said.

THE MILLION-DOLLAR CLUB

According to the IRS filings, the highest-paid hospital executive in fiscal 2011, not including those who received one-time retirement or severance payouts, was William Caron Jr., president of Maine Medical Center's parent company, MaineHealth. He earned a base salary of $1,058,110 and bonus payments of $69,896 for a total compensation of $1,128,006.

In all, six of the hospital employees earning $1 million or more worked for Maine Medical Center or its parent company, including two executives and four physicians.

Including one-time payments, the highest-paid executive at any hospital in Maine was Daniel Coffey, president and CEO of Acadia Hospital, in Bangor. In addition to his $356,359 salary, Coffey received retirement and other compensation totaling $1,696,795 for a total of $2,053,154.

The bulk of that money was a one-time, supplemental retirement payout totaling more than $1.6 million, according to Jeff Sanford, vice president and system controller at Eastern Maine Healthcare Systems, which owns Acadia and other hospitals in eastern Maine.

Sanford added that the money for the payout was set aside over many years and did not come directly out of Acadia's 2011 budget.

The highest-paid physician at a Maine hospital in 2011 was Dr. Marc Christensen, a neurosurgeon at St. Mary's Regional Medical Center in Lewiston, who earned $1,377,318.

St. Mary's marketing director Russ Donahue said Christensen is renowned in his field, and that higher-than-usual pay is needed to retain top specialists in communities such as Lewiston.

"Recruiting and keeping neurosurgeons in a region like central Maine requires higher compensation than that offered to many other physicians, due to the scarcity of these specialists," Donahue said.

The smallest Maine hospital with an employee who received more than $1 million in fiscal 2011 was The Aroostook Medical Center in Presque Isle. David Petersen, former CEO of Aroostook, received a base salary of $203,947 plus $840,129 in retirement benefits and other compensation for a total of $1,044,076. He is now retired.

Rep. Richard Farnsworth, D-Portland, House chairman of the Health and Human Services Committee, said he objects in particular to high executive pay at hospitals in smaller communities, where the average salary is relatively low.

"That's outrageous," he said. "It really goes far beyond what's reasonable for wages up there."

The Portland Press Herald/Maine Sunday Telegram asked both Democratic and Republican legislative leaders for comment. Only Democrats responded.

New Gloucester resident James Parisi, a former respiratory therapist at Central Maine Medical Center in Lewiston, said he is angered by how much Maine's top hospital executives receive.

Parisi said he resigned after a five-year period in which his hourly wage increased by a total of just 2 percent.

"They plead poverty but continue to pay outrageous executive salaries, while the real workers get their wages cut, benefits cut, etc.," he said.

THE COST OF TALENT

Hospital consultant Alexander Yaffe of Towson, Md.-based Yaffe & Co. Inc. said it can be difficult for hospitals to recruit and retain top-quality executive talent because such jobs require extensive knowledge of both medicine and business.

"Health care is tremendously complex, both as a physician and as a CEO," Yaffe said. "It's not like selling cars or making widgets."

Both Farnsworth and Gratwick agreed that running a hospital is an extremely demanding job, and that to some extent, hospitals tend to get what they pay for when it comes to executive salaries.

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