Hmo Chiefs Collect Biggest Pay Generous Compensation Puts Hmo Executives Attop Of Salary Survey
A financial shudder is passing through the health care industry. Patients anticipate higher premiums and Medicare payments. Nurses and medical technicians expect few pay raises. Young doctors wonder if they will achieve the affluence that once came attached to an M.D.
Yet some of the people running the health care insurance corporations that put limits on costs and salaries through their operation of so-called managed care plans seem to be doing very well. A new survey says the total pay, bonus and option packages for health care insurance chiefs are now higher than for any other industry, when firms of comparable size and performance are compared.
The study by Graef S. Crystal, a California-based specialist on executive compensation and editor of the Crystal Report, said the pharmaceutical/ biotech, commercial banking, telecommunications and diversified finance industries also pay their chief executive officers far above the average of companies of similar size and success.
The highest compensated on the list of health care insurance executives are Daniel D. Crowley, chairman and CEO of Foundation Health Corp. based in Rancho Cordova, Calif., at $6.1 million a year, and Leonard Abramson, chairman and CEO of U.S. Healthcare Inc. based in Blue Bell, Pa., at nearly $4 million a year. Crowley’s compensation was 277 percent above an average calculated by Crystal for companies of similar size and performance. Abramson’s was 107 percent above that average.
None of the executives named by Crystal could be reached Tuesday. A call to Foundation Health Corp. was answered by a recording that said the offices were closed. A message left at U.S. Healthcare headquarters was not returned.
Thomas A. Scully, president and CEO of the Federation of American Health Systems, said he thought the relatively high executive compensation for health maintenance organization (HMO) executives resulted in part from the rapid growth in stock prices and the heavy use of stock options to pay executives.
His own federation, which represents 1,700 investor-owned hospitals and other health care facilities, has had its quarrels with the HMOs, he said, but he thought the HMO executives and their companies deserve to profit if they can make the health care system more efficient.
Jane M. Orient, executive director of the Tucson, Ariz.-based Association of American Physicians and Surgeons Inc., said she was not surprised by the compensation for managed health care executives. She said her group, which represents independent doctors sometimes in conflict with HMOs, has unsuccessfully called for laws requiring such companies to inform consumers of their executive pay.
Jan Towers, director of government affairs at the Academy of Nurse Practitioners, said, “We are concerned about such figures. We don’t think they reflect very well on the focus that the health profession should be providing.”
Crystal noted that the issue of executive pay has rarely come up in the health care debate.
“It appears to me that while our legislators are haggling over how much to cut Medicare and Medicaid, and while nurses are out on the street in quantity and while doctors are screaming about their diminishing incomes, the CEOs of the large health care companies are quietly raking in fortunes.”
Crystal said the study focused on 896 CEOs who had been at their jobs at least three years at firms with stock price histories at least three years old. He calculated their average annual compensation packages based on a three-year total of salary, bonuses, stock options and other forms of income.