It's deja vu at the top of the an­nual as­so­ci­a­tion salary sur­vey

In new era of trans­parency, perquisites and de­ferred com­pen­sa­tion con­tinue to fall out of fa­vor at not-for-profit or­ga­ni­za­tions

Modern Healthcare - - Front Page - Joe Carl­son

Un­der the weight of pub­lic scrutiny and a tur­bu­lent pe­riod in the fi­nan­cial lives of tax-ex­empt as­so­ci­a­tions, many top ex­ec­u­tives at health­care-re­lated as­so­ci­a­tions took home less money in 2009 than they did the year be­fore.

Ac­cord­ing to the 10th an­nual Mod­ern Health­care sur­vey of pub­licly filed tax forms for nearly five dozen in­dus­try as­so­ci­a­tions, av­er­age to­tal com­pen­sa­tion for CEOs fell 5.6% from the prior year, even though or­ga­ni­za­tions’ rev­enue in­creased 12% in the 2009 tax year.

Trans­parency ap­peared to be an is­sue driv­ing pay, as as­so­ci­a­tions con­tin­ued to curb many perks such as auto and hous­ing al­lowances and coun­try club mem­ber­ships now that they are forced to dis­close them on pub­lic fil­ings in the sec­ond full year of the re­vamped Form 990 tax dis­clo­sure.

One or­ga­ni­za­tion on the Mod­ern Health­care list that did not dis­close such in­for­ma­tion was the Health In­dus­try Group Pur­chas­ing As­so­ci­a­tion, or HIGPA, which has been push­ing the trans­parency-chal­lenged health­care group-pur­chas­ing in­dus­try to open up even while it de­clines to dis­close ba­sic com­pen­sa­tion in­for­ma­tion that the 56 other or­ga­ni­za­tions on the list do.

Of the 50 ex­ec­u­tives for whom in­for­ma­tion from 2008 and 2009 was avail­able, av­er­age to­tal com­pen­sa­tion fell to $916,559 dur­ing the 2009 tax year, down from $971,274 the year be­fore.

The anal­y­sis, which is the first to be able to use two years’ worth of com­pa­ra­ble data from the IRS’ re­cently re­vamped Form 990 tax dis­clo­sures, shows that the changes in com­pen­sa­tion came pri­mar­ily in two ar­eas: perquisites and de­ferred com­pen­sa­tion.

Av­er­age base com­pen­sa­tion rose 5%, and av­er­age bonuses in 2008 rose by 13%. How­ever, those gains were more than off­set by the 35% av­er­age drop in perks listed un­der the cat­e­gory of “other com­pen­sa­tion” and a 36% drop in de­ferred com­pen­sa­tion pay­ments. The cost of tax-ex­empt ben­e­fits that the as­so­ci­a­tions pro­vided to the ex­ec­u­tives rose 14% dur­ing the year.

For the sec­ond straight year, the top pay on the list went to Billy Tauzin, for­mer pres­i­dent and CEO of the Phar­ma­ceu­ti­cal Re­search and Man­u­fac­tur­ers As­so­ci­a­tion. Tauzin earned to­tal com­pen­sa­tion of $4.6 mil­lion, up 3% from 2008. In all, nine ex­ec­u­tives on the list earned more than $1 mil­lion.

The mag­a­zine an­nu­ally sur­veys pay at health­care-in­dus­try mem­ber­ship as­so­ci­a­tions and ad­vo­cacy or­ga­ni­za­tions, which had bud­gets rang­ing from the Amer­i­can Health Qual­ity As­so­ci­a­tion’s $1.4 mil­lion in rev­enue to the Blue Cross and Blue Shield As­so­ci­a­tion’s $420 mil­lion. The av­er­age was $40 mil­lion.

On av­er­age, at the 53 as­so­ci­a­tions for which 2009 tax year data was avail­able, or­ga­ni­za­tional rev­enue in­creased by 12%. How­ever, the av­er­age fell to 6.4% when one sta­tis­ti­cal out­lier was re­moved—Amer­ica’s Health In­surance Plans, which had a 165% in­crease in rev­enue, to $184.7 mil­lion from $69.7 mil­lion the year be­fore.

Karen Ig­nagni, pres­i­dent and CEO of AHIP,

re­ceived a 4.7% cut in to­tal com­pen­sa­tion in 2009, driven pri­mar­ily by her 29% drop in perks as pay­ment. Her $500,000 bonus in 2009 was the same as the year be­fore.

How­ever, such de­tailed in­for­ma­tion was not avail­able for all of the not-for-prof­its.

Sev­eral of the or­ga­ni­za­tions on the list used an ap­par­ent loop­hole in the dis­clo­sure rules to limit how much in­for­ma­tion is pub­lished, build­ing on a trend in the growth of out­sourc­ing of man­age­ment of as­so­ci­a­tions.

HIGPA is one of sev­eral as­so­ci­a­tions on the list that use as­so­ci­a­tion man­age­ment com­pa­nies to han­dle the day-to-day as­pects of man­age­ment, in­clud­ing com­pen­sa­tion of all em­ploy­ees. But un­like the other or­ga­ni­za­tions, HIGPA does not dis­close what the out­side firm, Chicago’s SmithBuck­lin, pays Pres­i­dent Cur­tis Rooney.

HIGPA re­ported only that $330,750 of the $1.1 mil­lion it paid to SmithBuck­lin went to pay for “man­age­ment.” HIGPA had $2.1 mil­lion in to­tal rev­enue in 2009.

The in­struc­tions that ac­com­pa­nied the Form 990 for 2009 say that any cur­rent of­fi­cer’s salary “can be re­portable” on a re­lated form called Sched­ule L if the em­ployee is paid by the out­side firm. HIGPA did not in­clude a Sched­ule L.

Mike Nikolich, se­nior vice pres­i­dent and chief mar­ket­ing of­fi­cer for SmithBuck­lin, says the as­so­ci­a­tion man­age­ment com­pany busi­ness model is fun­da­men­tally dif­fer­ent from how most


For the sec­ond straight year, for­mer PhRMA chief ex­ec­u­tive Billy Tauzin tops our an­nual sur­vey of

com­pen­sa­tion for as­so­ci­a­tion ex­ec­u­tives.

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