With nonprofit health, the more the CEO earns, the better the hospital, survey finds

Nonprofit hospitals that perform best on finances and patient quality tend to pay their CEOs more than the majority of their peers, a new study says.

The findings, published recently by Mercer and Truven Health Analytics, suggest that this was especially true among hospitals that performed in the top 10 percent in a test of sorts -- a scorecard of financial and patient performance markers measured between 2010 and 2015.

CEO compensation at national benchmark hospitals was 17 percent higher than those further down on the list, after adjusting for hospital class. CEO compensation at hospitals above the 90th percentile was about 10 percent higher than those below that threshold.

[Also: Healthcare executive compensation up 8 percent in 2014, study finds]

The gap between top-performing hospitals and all others on the list is significant; even those institutions that scored a hair below the best-performing group paid their CEOs a relatively scant 1 percent more than others of their size. This was manifest in hospitals at or below the 80th percentile.

"Only the very highest levels of balanced, high organization-wide performance were associated with higher compensation," the study authors said.

Regulators and state legislatures have been making an effort to tie nonprofit hospitals' CEO compensation to performance, using objective benchmarks. Specifically, the study cited efforts in such states as California and New York to limit executive compensation and tie it to those objective measures.

Authors of the study took the performance measures submitted by hospitals and compared them to the executive compensation reports on Form 990s collected by the IRS between 2011 and 2013, examining over 1,100 hospitals total.

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In addition to those findings, the study discovered that CEO compensation was higher overall at teaching and medium-to-large community hospitals with 100 or more beds. Major teaching hospitals had the highest levels of compensation, while small community hospitals had the lowest.

Perhaps oddly, there seemed to be a correlation between higher executive pay and poor performance in the area of inpatient care complications, as well as adjusted expense per inpatient discharge.

That finding "is seemingly contradictory in terms of board intent to incentivize improved quality," the study claimed. "At least to some extent, higher complications may be related to industry-wide efforts to improve documentation and coding, which can impact both metric in opposite directions. Another possibility would be inconsistent reporting by hospitals of conditions that are 'present on admission.'"

Twitter: @JELagasse