At $8.54M, is UPMC CEO’s pay too high?
UPMC President and CEO Jeffrey Romoff made $8.54 million last year as head of the Pittsburgh region’s largest health care network, a compensation package that included $3.56 million in bonus and incentive pay.
The bonus by itself was higher than any other UPMC employee’s total compensation.
Behind him, 33 other staffers collected at least $1 million in the fiscal year ending June 30 — including three who made at least $3 million and 10 others who made more than $2 million, according to the Internal Revenue Service Form 990 posted on the health system’s website late Thursday.
The annual list of top salaries of hospital executives always sparks debate about how much compensation is too much.
This time, UPMC’s roster of millionaires has resurfaced as state Attorney General Josh Shapiro questions whether the health giant is meeting its obligations as a charity under Pennsylvania law.
Could executive compensation become part of the discussion, too?
It has happened before. In 1990 and in 1996, Commonwealth Court judges cited executive pay when they ruled in favor of local taxing bodies that had challenged a hospital’s tax-exempt status.
In the first case, involving Hamot Medical Center in Erie, the judge described executives’ retirement benefit packages worth $250,000 to $300,000 as “copious.”
In the second case, a different judge called the Harrisburg-based Pinnacle Health System CEO’s $332,000 compensation — that’s $560,840 in 2018 dollars — as “inconsistent with the compensation level of a charitable institution.”
According to last week’s tax filing, 74 UPMC staff members earned more than $560,000 last year.
On the other hand, neither Pinnacle Health nor Hamot Medical Center is on the scale of a UPMC — in fact, UPMC owns both of them now.
Mr. Romoff’s $8.54 million in compensation represented a $2.42 million increase from the previous year. A UPMC spokeswoman said the increase “is due to the timing of when portions of Mr. Romoff’s deferred compensation were awarded in 2016 and 2017.” Is it out of line? “That is a big number,” said Anne Gingerich, executive director of the Pennsylvania Association of Nonprofit Organizations in Harrisburg, which represents nonprofits.
But she also suggested that nonprofit hospitals, and the people who run them, might represent a special case.
“I want the best-quality people working on my body and my health, so I personally don’t have a problem with” the higher salary.
A 2016 study on charity organizations’ CEO compensation by Washington, D.C.based Charity Navigator found that of the 4,587 charities, only 10 paid their top executive $1 million or more.
Meanwhile, a different study last fall by an orthopedic professional journal looking at the wage gap between physicians and hospital executives found the average hospital CEO salary in 2015 was $3.1 million.
For example, Cleveland Clinic’s most recent filing reported that its now-retired president and CEO Toby Cosgrove received $7.63 million in total compensation for calendar year 2017.
Highmark Health, UPMC’s primary competitor in Pittsburgh, reported in November that President and CEO David Holmberg’s total compensation was $5.55 million. In a separate filing, Highmark Health subsidiary Allegheny Health Network reported its president, Cynthia Hundorfean, received $1.76 million.
Or consider that Mr. Romoff’s $8.54 million in compensation would rank only 16th among public company executives in this region, despite leading a $16 billion enterprise that employs 87,000 people — well behind former Arconic Inc. CEO Chip Blankenship ($17.66 million), EQT CEO Robert McNally ($15.99 million) and PNC Financial Services Group CEO Bill Demchak ($15.68 million).
UPMC’s other top earners last year were Diane Holder, president and CEO of UPMC Health Plan ($3.52 million), David Farner, chief strategic and transformation officer ($3.34 million), and chief medical and scientific officer Steven Shapiro ($3.16 million).