Huge Profits for Nonprofit Physicians

Physician's Money Digest, November15 2004, Volume 11, Issue 21

The way things are going inprofessional medicine today,many of America's doctors areapt to think they work fornonprofit entities. If only.

Chronicle of Philanthropy

Although salaries for top executivesat America's nonprofit organizations increasedat the slowest pace on recordlast year, several physician-hospitalexecutives managed to pull in morethan $1 million, according to a recent(www.philanthropy.com) survey.

Big-Buck Docs

The median salary of the 215 leaderswhose organizations were surveyedwas $291,256. Although a hefty pay,that number pales beside the earningsof the top five on the list, all of whomwork at hospitals.

The leading earner was HaroldVarmus, MD, the CEO for MemorialSloan-Kettering Cancer Center, whomade $1.7 million in 2003. Other leaderswhose salaries topped $1 million lastyear included Floyd D. Loop, MD, of theCleveland Clinic Foundation ($1.6 million),Herbert Pardes, MD, of New York-Presbyterian Hospital ($1.2 million), andPeter G. Taber, PhD, of the BaylorCollege of Medicine ($1.2 million). Fifthon the list was James Mandell, MD,CEO of Children's Hospital in Boston,whose 2003 salary was $823,680.

Overall, salaries for nonprofit leadersrose an average of 3.7%, the smallestjump since 1996. Last year alsomarked the 6th straight year that thepercentage increase in pay for nonprofitexecutives outpaced the salary boostsenjoyed by their for-profit counterparts,who notched an average 3.6% raise.

Practicing doctors should be so lucky.According to two separate compensationsurveys for 2003—by the MedicalGroup Management Association and theAmerican Medical Group Association—the average primary care physician(PCP) gets salary increases that fail totop inflation. Blending the two surveys,the median annual salary for a PCP lastyear was only about $157,000.

Who Profits?

Rounding out the top 10 US CEOsalaries were a variety of nonprofits,including the Metropolitan Opera Association,Vanderbilt University, NewYork University, the JFK Center for thePerforming Arts, and the Lilly Endowment.At some organizations, however,the employee with the highestsalary wasn't the president or CEO.For example, Michael Krzyzewski, theDuke University head basketball coach,made $315,000 more last year than theuniversity's president. The honor forthe top nonprofit salary went to JamesGrifo, MD, an OB/GYN professor atNYU Medical Center, who made $2.7million last year.

Apparently the trend toward payingbig money to top executives of nonprofitsin certain fields (ie, health care andthe arts) is based on a shrinking talentpool. Leaders with a solid track recordin these areas are becoming harder tofind and those with established credentialsare commanding fatter pay packages.Okay, then how about payingpatient-care doctors what they deserve?