Nuvance Health saw net $130M loss in 2020
CEO’s pay questioned by state officials
DANBURY — Nuvance Health, which runs Danbury and Norwalk hospitals, along with five others in Connecticut and New York, faces a net loss of more than $130 million last fiscal year. The loss came as the hospital system grappled with the COVID-19 pandemic.
The health system lost over $300 million in net patient revenue due to the pandemic in fiscal year 2020, which runs from Oct. 1, 2019, to Sept. 30, 2020, Nuvance spokeswoman Andrea Rynn said. Nuvance received about $168 million in COVID relief during that time.
The patient revenue was tied largely to the pandemic, which burdened health care workers and halted elective surgeries for some time.
“During this time, the system has also experienced significant price increases in, and utilization of, medical supplies, particularly personal protective equipment, as global supply lines were disrupted by the pandemic,” states Nuvance’s audit report pre
pared by Ernst & Young LLP.
The loss came as Dr. John Murphy, who heads Nuvance Health, earned more than $14 million in salary and fringe benefits last year, even as the Nuvance Health system lost revenue. The total pay was tied largely to a one-time required payment, Rynn said.
But the financial loss, however, was tied largely to the downturn in patients. The pandemic caused fewer people to come to the emergency room, particularly in mid-March through June, affecting the hospital system’s bottom line.
At Danbury Hospital, the outpatient emergency room volume declined 20 percent in fiscal year 2020, according to the reports to the state. Outpatient visits declined 20 percent from the first five months of the fiscal year to the last seven months.
The average length of stay for patients increased 5 percent at Danbury Hospital. The “case mix,” which reflects the diversity in the types of patients, increased 3 percent, according to the reports to the state.
However, the number of days patients were in rehabilitation dropped 25 percent, pediatric days decreased 42 percent and psychiatric days decreased 10.2 percent.
Through the start of the pandemic until Sept. 30, 2020, Nuvance administered more than 79,300 COVID-19 tests, with almost 6,900 coming back positive, according to figures filed with the state Office of Health Strategy. The hospitals discharged about 1,280 COVID patients, needed ventilators in 204 cases and saw 273 people die from the virus.
Fringe benefits
Murphy, president and CEO of Nuvance Health, saw the majority of his compensation come from fringe benefits in fiscal year 2020, according to public records filed with the state’s Office of Health Strategy earlier this year. The most recent fiscal year came to a close at the end of September, but documents for that year will not be available until 2022.
He earned more than $12.8 million in fringe benefits, a significant increase from 2019, when he earned about $82,600 in these benefits. His total compensation in 2019 was $2.66 million, which is 426 percent less than what he earned in 2020.
“In 2020, [Western Connecticut Health Network] issued a one-time pension payment to Dr. Murphy,” spokeswoman Andrea Rynn said in an email. “This was a contractually obligated payment based on his years of service, many contributions and employment agreement.”
WCHN merged in 2019 with hospitals in New York to create Nuvance Health.
“The biggest complaint that people have about health care is that it’s too expensive,” said Lynne Ide, director of program and policy for the Universal Health Care Foundation of Connecticut. “Consolidation in the health care industry and acquisition of hospitals by for-profit entities that are driven by different metrics, driven by different bottom lines, does nothing to help the consumer, the patient, does nothing to improve the quality of care that people are receiving and the affordability of care that people are receiving.”
The Office of Health Strategy questioned why the fringe benefits “appear high as a percentage of total compensation” for Murphy, the chief financial officer and a staff physician. These employees’ benefits were more than 50 percent of their total compensation.
In a document filed Aug. 26, the health system explained it made “one-time benefit distributions” to these employees “under the terms of the supplemental defined benefit retirement plans.” Murphy’s total payment for the year was higher than heads of other hospital systems across the state.
“Employees across our system receive a robust, market competitive benefits package, including health insurance, paid time off, and retirement savings plans,” Rynn wrote.
The Office of Health Strategy requires various documentation, including the compensation for hospitals’ 10 highest-paid employees, by Feb. 28 of each year for the previous fiscal year, which runs Oct. 1 to Sept. 30. Additional reports are due by March 31 annually.
Danbury Hospital was approved for two extensions on these deadlines, with the hospital citing COVID-19 challenges as among the reasons for the delay, documents show.
Highest-paid employees
Nuvance filed reports showing the top 10 highestpaid employees at Western Connecticut Health Network, as well as the 10 highest-paid staff members at Danbury, Norwalk and Sharon hospitals.
Some employees, including Murphy, made all lists. For employees on multiple lists, the Western Connecticut Health Network report should show their full compensation, said Ron Ciesones, principal health care analyst for the Office of Health Strategy. Rynn confirmed this.
“Nuvance Health is committed to paying all our employees commensurate with their years of experience, the work they accomplish for our communities, market competitive benchmarks and industry standards,” Rynn wrote. “This commitment, reviewed by our volunteer Compensation Committee, extends to our clinical, support and administrative staff, as well as leadership. We adjust salaries on an ongoing basis to ensure every member of our exceptional team is compensated appropriately.”
Nuvance executives’ pay may reflect their tough job and the competitive market.
“Hospital CEOs have a singularly unique role, responsible for organizations that are complex and dynamic, highly regulated, resource intensive, and that provide essential community services,” Jill McDonald Halsey, spokeswoman with the Connecticut Hospital Association, said in a statement. “Executive compensation decisions are based on a number of factors, including professionally prepared competitive market analyses.
Arthur Strichman, staff physician in the emergency room, was the second highest-paid employee at Western Connecticut Health Network, earning $1.26 million in 2020. Of that, $1.1 million came from fringe benefits. He didn’t make the top 10 list in 2019.
Steven H. Rosenberg, chief financial officer, earned the No. 3 spot on Western Connecticut Health Network and Danbury Hospital’s lists. In total, he earned $1.22 million, with $672,000 of that coming from fringe benefits.
His full earnings are 7.44 percent higher than in 2019. His compensation from Danbury Hospital alone was almost $551,000, with nearly $304,000 from fringe benefits.
Sharon Adams, president of Danbury and New Milford hospitals, was the No. 2 earner from Danbury Hospital, with a total compensation of almost $947,000. Her fringe benefits were nearly $46,000, which the health strategy office noted seemed “low” compared to Murphy and Rosenberg’s. She didn’t make the Western Connecticut Health Network list.
Aside from Murphy, Strichman and Rosenberg, five other employees earned more than $1 million.