HELENA — Most top executives at Montana’s largest hospitals received raises and bonuses that increased their six-figure salaries for 2010 or fiscal 2011 — and at Benefis Hospital in Great Falls, executives had a huge payout in 2010 that officials described as an anomaly.
John Goodnow, the CEO at Benefis, took home $1.9 million in total compensation for 2010, and four other top executives at the state’s third-largest hospital more than doubled their salary that year with big one-time payouts, each of them receiving total compensation ranging from $500,000 to $700,000.
Hospital spokeswoman Heather Palermo said the payouts are not extra compensation, but rather the cashing out of some retirement payments and deferred compensation awarded to the executives in prior years.
The hospital’s compensation consultant recommended the payouts so that the hospital would comply with anticipated changes in state and federal laws on retirement and deferred-compensation plans, she said.
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Compensation levels for Benefis executives dropped back to normal levels in 2011, Palermo added.
Still, most top executives, medical directors and specialist physicians at Montana’s largest nonprofit hospitals continue to command salaries in the mid-to-high six figures, putting most of them in the top 0.5 percent of income earners in Montana.
CEOs at Montana’s nine largest hospitals in Billings, Missoula, Kalispell, Helena, Butte, Bozeman and Great Falls earned base salaries ranging from $258,000 to $583,000 in fiscal years ending from December 2010 to June 2011. When bonuses and other compensation are added to the equation, the upper range increases to $769,000 — if you exclude the anomaly of Goodnow’s $1.9 million take.
Those amounts also don’t include extra retirement payments or deferred-compensation paid out as retention bonuses to top executives, who can cash in those payments later, if they stay with the hospital past a certain date. Also not included are payments into the executives’ retirement accounts.
The highest-paid physicians at the same hospitals earned anywhere from $373,000 to $1.33 million in fiscal 2010, with most of these doctors taking home well over $600,000.
Hospital officials say the big salaries are a market reality if hospitals want to attract and maintain top executives and physicians, and are in line with pay at similarly sized hospitals in the region.
“In order to ensure our system and affiliated-care sites continue to provide high-quality patient care, SCL Health System requires a high-quality executive team to lead the organization,” said Tiffany Garcia, spokeswoman for St. Vincent Healthcare in Billings. “That is why we are committed to paying our executives and associates competitively, based on common compensation practices in each of our markets.”
SCL stands for Sisters of Charity of Leavenworth, the Denver-based organization that oversees 11 hospitals in four states, including three in Montana.
Hospital officials also say hospitals in Montana are large, complex operations with huge budgets and hundreds of employees, and that their CEO pay is often comparable to what top executives earn at for-profit, nonmedical businesses of similar size.
The largest Montana hospitals and health systems — Billings Clinic, St. Vincent Healthcare in Billings, Benefis and Kalispell Regional — employ more than 2,000 people, while all of the other top nine hospitals, except St. James Healthcare in Butte, employ more than 1,000 people.
Other highlights of the Gazette State Bureau’s annual survey of hospital executive pay:
— Six of the nine CEOs at Montana’s major hospitals had base-salary increases in 2010 and all but one earned an incentive payment or bonus. Goodnow of Benefis earned the largest bonus at $188,300, on top of his $477,000 salary.
Hospital officials said bonuses are paid only if the hospital meets various financial, clinical and patient satisfaction goals.
— CEO base salary increases ranged from a few percentage points to as high as 11 percent for Goodnow and 10 percent for Kalispell Regional Medical Center CEO Velinda Stevens.
In both cases, hospital officials said the higher increases were recommended by salary consultants to bring the salaries up to regional averages.
At Kalispell, Stevens’ salary had been relatively flat for the last couple of years, and hadn’t been adjusted according to the regional average for at least 18 months, said Senior Executive Director Jim Oliverson.
— The only major hospital CEO who took an actual pay cut in fiscal 2010 was Steve Carlson at Community Medical Center in Missoula. His salary declined by 1 percent and he had a smaller bonus, and his total compensation of $339,500 was about 12 percent less than he earned the previous year.
Mary Windecker, vice president for planning and marketing at Community Medical Center, said the hospital’s entire management team took a three-month, 10 percent pay cut in 2010 so employee salaries wouldn’t be affected during the economic downturn.
Billings Clinic CEO Nicholas Wolter earned $1,000 less in base salary in fiscal 2010, but a $77,500 bonus gave him more total compensation than the previous year.
St. Peter’s Community Hospital in Helena reported paying then-CEO John Solheim a slightly lower base salary in fiscal 2010, but said the change is because pay now considered to be a bonus had been included in 2009. His salary and bonus payments for fiscal 2010 gave Solheim 8 percent more in total compensation than the previous year.