HealthLeaders Media Finance - March 9, 2009 | Are You Getting Paid Too Much? View as a Webpage | Subscribe for Free
Are You Getting Paid Too Much?
Philip Betbeze, Senior Editor-Finance

As I read constantly about the executive compensation levels we're seeing at companies that are insolvent, I'm reminded of Clint Eastwood's final words to the bad guys in his Dirty Harry movies. Are you, as a top executive at a nonprofit, or a key employee of the same, getting paid too much? Well are ya, punk? [Read More]
  March 9, 2009

Editor's Picks
Grassley questions hospital leaders' pay anew
Stop me if you've heard this before, but Sen. Charles Grassley thinks you're being paid too much. I had scheduled my weekly column to come out last week before the Obama budget column bumped it to this week, but it's timely nonetheless, given that Grassley hopes to introduce legislation, as part of a sweeping healthcare overhaul later this year, that would put more pressure on boards to keep salaries in check following the IRS report on average nonprofit hospital senior executive salaries. Under current IRS rules, the burden is on the agency to prove a salary is excessive. Grassley is considering whether to try to change the regulations to shift the responsibility to the hospital board to prove a salary is reasonable. I know it's apples and oranges, but if he's this concerned about million-dollar salaries given to hospital CEOs, how concerned must he be about the tens and hundreds of millions some financial industry leaders are pulling down under the same board-stacking, consultant-driven salary and bonus system. Oh right, those are "profit-making" companies. [Read More]
In Obama's health plan, many industry participants see good business
After the initial shock of President Obama's budget, which calls for serious changes in the way the government pays for healthcare, many industry interest groups are not quite as outraged, at least publicly, as many might have expected. Perhaps that's because the plan tries to spread the pain pretty evenly among hospitals, drug manufacturers, and other interested groups. However, that doesn't mean the plan doesn't have its serious opponents. One is in the curious visage of former HCA chief Rick Scott, who now runs a chain of Florida urgent care clinics. Scott has vowed to spend as much as $5 million of his own money to lobby against the plan, which he says would lead to healthcare rationing. Anyone else see the irony here? Richard Scott, who left HCA in the midst of a 1997 federal investigation into Medicare billing and physician recruiting that cost the company $840 million is spending his own money to stop a plan that is geared toward cutting waste? By contrast, many powerful lobbying organizations don't seem nearly as concerned, as they think the plan would open new markets in addition to the "flesh wounds" the plan would inflict on nearly every interested stakeholder. Still, we'll see what survives in the plan once Congress gets done with it. [Read More]
Cleveland's University Hospitals, Sisters of Charity rework partnership
The Sisters of Charity and Cleveland's University Hospitals have agreed to rework what had become a cumbersome ownership structure for three hospitals in the system. The deal will allow University Hospitals to take over business operations at St. John West Shore Hospital and will manage the investment of $100 million ($50 million from each system) to upgrade the facility. The agreement also calls for Sisters of Charity to take over full ownership of Mercy Medical Center in Canton and of St. Vincent Charity Hospital in downtown Cleveland. The two systems have split ownership of the three hospitals since 1999. The most interesting item in the story is that amid a steady stream of news about cancellations of capital investment at hospitals nationwide, the fact that the two systems will actually be boosting capital investment is intriguing. [Read More]
Finance Forum
Protesting the Award of a Federal Healthcare Contract
A large organization solicits bids from three major hospitals for creation of an exclusive provider network. After a period of time, two hospitals learn that they were not selected. Not only do they wonder how their proposals were evaluated, but they have heard rumors that the contract was "wired" all along. What recourse do they have to learn about the process or challenge the decision? If the organization that issued the bid is a private entity—probably not much. If the bid was issued by the federal government—a lot! [Read More]
Finance Headlines
White House czars' power stirs criticism
Chicago Tribune - March 5, 2009
Georgia hospitals, governor face off over healthcare funding
Atlanta Journal-Constitution - March 4, 2009
UConn study backs proposal for new hospital
Hartford Courant - March 5, 2009
Baucus questions lowering deductions to fund health plan
Wall Street Journal - March 4, 2009
Baylor Health Care System asks Texas for share of stimulus for projects
Dallas Morning News - March 3, 2009
Obama's plans for sharp cuts leave health insurers reeling
The Tennessean - March 4, 2009
West Penn Allegheny quarterly losses hit $5.6 million
Pittsburgh Post-Gazette - March 3, 2009
New Orleans-area hospitals bleeding money
New Orleans Times-Picayune - March 1, 2009
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Money Talk

Roper St. Francis Healthcare, Charleston, SC
Rating: Aa1
Outlook: Stable
Affected Debt: $80 million
Agency: Moody's Investors Service
Remarks: Upgraded rating from Aa3 because of the delivery of an irrevocable letter of credit from Wachovia Bank and the conversion of the bonds from an auction-rate mode to a daily interest rate mode.
[Read More]
Audio Feature

Planning Through the Crisis: This week we visit with Jason Sussman, a partner at Kaufman-Hall, about the myriad challenges hospital CFOs are dealing with these days, from forced layoffs to an inability to borrow. Jason talks about how his clients are revising their financial planning, and we talk about the typical profile of healthcare organizations that are facing the most stress as the financial crisis mutates and matures.
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