While many workers in the Tampa Bay area have had their wages frozen or reduced in the past few years, life has been kinder to chief executives at nonprofit hospitals in the Tampa Bay area.
A bright light in a dim economy, most local tax-exempt hospitals have continued to post surpluses, despite losses on investments and the growing number of uninsured. And the executives at the helms of these organizations have been duly rewarded by their community-based boards, according to the federal tax filings required of such organizations. In fact, average compensation at tax-exempt hospitals here is well above the national average.
Members of the millionaire men's club include:
• Isaac Mallah, chief executive of St. Joseph's Hospital in Tampa, who received total compensation of $2.2 million in 2008, the most recent year available.
• Mallah's boss, Steve Mason, who heads BayCare Health System, toted up total compensation of more than $1.7 million.
• Tampa General Hospital's chief executive, Ron Hytoff, also earned more than $1.7 million.
• At All Children's Hospital in St. Petersburg, Gary Carnes' pay package was about $1.2 million. Across the street at Bayfront Medical Center, Sue Brody, the only female chief executive of a freestanding nonprofit hospital in the area, was paid $744,149.
• Dr. William Dalton, president and chief executive of Tampa's H. Lee Moffitt Cancer Center and Research Institute, received just over $1 million in total compensation in 2008. But it could have been higher. In both 2008 and 2009, Moffitt's board eliminated bonuses for all managers because of tough economic conditions.
Average compensation for chief executives at 14 nonprofit hospitals in the Tampa Bay area was about $876,000. Meanwhile, according to an IRS survey of more than 500 nonprofit hospitals last year, the national average was $490,000.
BayCare's Mason said he won't apologize for what he's paid to lead the seven-hospital system, which had more than $2 billion in revenue in 2008.
"I have significant responsibility over a lot of resources, providing a service that improves the health of the community," said Mason, who joined BayCare in 2004. "This is what it would cost our board to replace me."
In recent years, the public has become particularly sensitive to seemingly outsized executive pay in all fields. The salaries of hospital and other health industry officials have come under special scrutiny as Congress wrestles with reform.
For-profit hospitals, which make up about 20 percent of all institutions, don't have to publicly disclose how much the executives at each facility earn. But in order to qualify for up to $20 billion in tax exemptions each year, nonprofit hospitals are required to file financial reports known as Form 990s annually with the IRS. These forms, which are available to the public, provide details on the most highly compensated employees. By law, hospitals are required to show that such compensation is "reasonable" when compared with pay at comparable institutions.
Prodded by Sen. Chuck Grassley, R-Iowa, the IRS reviewed nonprofit hospital pay in 2009. Discovering multimillion-dollar compensation packages, the IRS report said, "For some there may be a disconnect between what, as members of the public, they might consider reasonable and what is permitted under the tax law."
Officials at area hospitals say their boards adhere "meticulously" to IRS rules, hiring independent consultants every year to ensure their chief executives' salaries are comparable to pay at similarly sized nonprofit institutions. Mason said BayCare's board tries to ensure that its total compensation stays at about 75 percent of the maximum paid.
"The IRS looks at institutions in the 90th percentile and above," he said. "We stay well below that red flag."
Eye-popping pay packages can also include special one-time payments. Mallah, who has been at St. Joseph's for more than 30 years, had more than half his 2008 compensation, $1.2 million, directed to a deferred compensation plan in 2008.
Jim Warren, head of TGH's board, said accelerated retirement contributions accounted for about 40 percent of its chief executive's $1.7 million pay package.
"Part of our employment agreement with Ron Hytoff back in 2001 was that we would fully vest him in our SERP (supplemental executive retirement plan) by age 65," Warren said of the contract with Hytoff, now 63. "We have one more year; after that, our contribution will go down."
Warren said TGH's board uses both an independent consultant and internal benchmarks to determine Hytoff's compensation.
"We use a very clearly defined performance grid so it takes out the emotion," he said. "But since 2001, TGH has been like a phoenix, rising out of its ashes. And I give Ron Hytoff the vast majority of credit for that."
Kris Hundley can be reached at firstname.lastname@example.org or (727) 892-2996.