Nonprofit Hospital CEO Compensation: Does Quality Matter?

Past research has documented that increases in profits and health system size, as well as increases in the reward generosity for improving these metrics play an important role in explaining increases in nonprofit hospital CEO pay between 2012 and 2019. To test whether hospital quality measures play...

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Bibliographic Details
Published in:Medical care Vol. 63; no. 10; p. 787
Main Authors: Jenkins, Derek, Short, Marah, Ho, Vivian
Format: Journal Article
Language:English
Published: United States 01.10.2025
Subjects:
Chief Executive Officers, Hospital - economics
Chief Executive Officers, Hospital - statistics & numerical data
Humans
Organizations, Nonprofit - economics
Organizations, Nonprofit - statistics & numerical data
Quality Indicators, Health Care - statistics & numerical data
Quality of Health Care - economics
Quality of Health Care - statistics & numerical data
Salaries and Fringe Benefits - statistics & numerical data
United States
United States
nonprofit hospitals
financial performance
CEO compensation
hospital consolidation
quality
ISSN:1537-1948, 1537-1948
Online Access:Get more information
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Summary:Past research has documented that increases in profits and health system size, as well as increases in the reward generosity for improving these metrics play an important role in explaining increases in nonprofit hospital CEO pay between 2012 and 2019. To test whether hospital quality measures play a supplemental role in determining CEO pay. We estimated linear regressions for 2012 and 2019 of the log of CEO wages on system or independent hospital characteristics, including quality. The regressions were used to construct a Oaxaca decomposition of factors associated with CEO compensation. One thousand forty-seven nonprofit health systems and independent hospitals in 2012 and 812 in 2019. CEO compensation, hospital profits, charity care, hospital size, teaching status, system status, 30-day mortality rate for pneumonia patients, hospital-wide 30-day readmission rate. We find that better quality was more closely associated with higher pay among hospital CEOs in 2012 versus 2019. The inclusion of these quality measures in the analysis somewhat reduced the observed relative return for leading larger hospitals or health systems in 2012, but not in 2019. The link between quality and CEO pay is weaker in 2019 than in 2012. The results suggest that nonprofit hospital CEOs are being rewarded more for leading large hospitals or systems, but not for providing higher quality care.
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ISSN:1537-1948
1537-1948
DOI:10.1097/MLR.0000000000002198