March 23, 2013 in City

Vestal: Healthy paycheck can be measured in Smith-years

By The Spokesman-Review
 

Twenty-one million dollars.

If, during the travails of life, you encountered health problems that required fixing at Deaconess, and if you found yourself dismayed at the cost of the care, you could take comfort. Your burden helped provide $21 million in compensation for the man at the top of the corporate pyramid: Wayne Smith, CEO, chairman of the board, director, president and poo-bah of Community Health Systems Inc. of Franklin, Tenn.

Twenty-one million dollars.

Several other executives of CHS earn salaries in the millions as well. And it’s not just them – and it’s not just for-profit hospitals. The top honcho of the nonprofit Providence Health & Services, chief executive Dr. John Koster, earned $6.4 million in 2011, and four senior VPs earned more than $3 million.

And it’s not just them, of course. Our national pay scale is so incredibly top-heavy, so inclined toward ever-increasing, lavish rewards for executives and managers, that it’s stopped being noteworthy to even point it out.

Twenty-one million dollars for one year’s work. It could be a new unit of measurement: the Smith-year.

Twenty-one million dollars is more or less the going rate for being the head of a massive corporation. It’s what the CEOs of AT&T and Ford Motor Co. took home in 2012, roughly. Plenty of CEOs made more; the nation’s best-paid CEO in 2012 was McKesson’s John Hammergren, who made $131 million. Smith’s pay was about twice the average CEO salary at the nation’s largest 800 corporations in 2012, according to Forbes.

Should this bother us? Virtually every level of the wage and salary economy has stalled or withered for decades – except in the biggest offices of the tallest buildings, where salary inflation is epidemic, unwarranted and corrosive. Executive salary inflation has coincided with salary stagnation for everyone else. Between 1978 and 2011, annual CEO pay in America increased 726.7 percent, while worker pay increased 5.7 percent.

This executive salary inflation trickles down, of course – but only to other executives. You see it in the salary arms races for administrators at colleges, where ever-higher salaries for presidents are rationalized by the need to compete with the private sector. Somehow, you don’t hear boards of trustees talking much about the need to raise faculty salaries, or janitor salaries, to compete in the market.

You see it in instances like the reorganization of Spokane’s city government, where several management positions were cut and raises went to the survivors. Mayor David Condon’s plan did save money overall – and yet in times of organizational downsizing, it tends to be upper management and upper management only who get those kinds of raises. When was the last time you heard a mayor propose, say, raising the salary of police officers because he was shrinking the size of the force? When was the last time you heard that layoffs would be accompanied by raises for the survivors?

The nation’s top administrators and executives are simply worth more, and since they are also the ones who hand out the salaries, they’re in the best position to reward this worth. They are worth so very much more that they’ve entered the realm of huge abstract figures that don’t feel very real to the rest of us, scrabbling around with our checkbook balances and change jars.

Twenty-one million dollars. A Smith-year.

Just how much is that? It’s more than twice what the Republican National Committee is spending on an outreach plan to minority groups to make the GOP seem more “welcoming and inclusive.” The RNC released a report about its electoral woes, including the breaking news that focus groups see the party as “narrow-minded” and “out of touch.” Trying to change this perception is going to cost the party $10 million – less than half a Smith-year.

It’s also more than twice what the U.S. government has put out as a bounty on the head of Hafiz Mohammad Saeed, founder of the Pakistani group blamed for the Mumbai terror attack. Like an inclusionary veneer for the GOP, Saeed’s head is worth not quite half a Smith-year.

A Smith-year, in other words, is a lot of money. It could pay for a lot of health care, if health care was what you were after. Using “fair-price” figures from the Health Care Blue Book, here’s an idea of how many actual medical procedures a Smith-year would cover:

• 35,775 root canals.

• 6,954 hemorrhoidectomies.

• 3,413 vaginal births.

• 2,371 C-sections.

• 1,852 appendectomies.

• 642 amputations – one arm and one leg at a time.

Shawn Vestal can be reached at (509) 459-5431 or shawnv@spokesman.com. Follow him on twitter at @vestal13.

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