Hospital CEOs
Hospital CEOs Pay Is Too Damn High,
President Trump’s One Big Beautiful Bill Act — otherwise known as the “Big Beautiful Bill” — is projected to magnify economic inequality in the U.S.
By 2034, the top tenth of U.S. households will see an estimated $13,600 increase in “household resources” (annual income), while the bottom tenth will see a $1,200 decrease. These changes are largely due to tax cuts and reduced investment in benefits programs such as Medicaid. With 10 million additional people forecasted to become uninsured by 2034 as a result of this legislation, our healthcare system is facing a major financial upheaval. As a practicing physician, I have already begun to witness site closures and layoffs as hospitals prepare for the bill’s effects.
In this uncertain environment, wage equality within hospitals — measured by the ratio between what employees and executives are paid — matters more than ever.
The Big Beautiful Bill arrives at a time when wages are already increasingly unequal across industries. Amongst top publicly traded corporations, CEO compensation grew 1,209% from 1978 to 2022, while the typical worker’s compensation grew only 15.3%. As of 2022, CEOs were paid 344 times as much as a typical worker.
My co-authors and I recently demonstrated that this trend persists in nonprofit hospitals. Our study, published in Health Affairs, found that wages for nonprofit hospital CEOs grew by 27.5% from 2009 to 2023, while the average wage for all employees (inclusive of executives) increased by only 9.8%. In 2023, nonprofit hospital CEOs were paid 12 times the average wage of all hospital workers, with the average CEO salary exceeding $1 million annually. The COVID-19 pandemic put only a small dent in this trend, with the CEO-employee wage gap continuing to grow post-2020.
Under the White House budget legislation, hospitals are projected to lose 18% of their Medicaid payments over the next decade and may thus be forced to make difficult decisions to offset cuts to already thin margins. Researchers have warned that hospitals may eliminate less profitable service lines, lay off employees, or even close entirely. All of which would cause delays in care or force patients to travel further while jeopardizing the economic security of healthcare workers.
As economic inequality continues to grow, the costs of system-level stressors should not fall on patients, already-overworked clinical staff, or low-wage hospital workers who rely on their jobs to sustain a livelihood. Rather, we should take a long and hard look at how much our nonprofit healthcare executives are compensated.
Several legislators have proposed wage caps for hospital executives, including state-level bills and ballot initiatives in Massachusetts, Vermont, and California. These policy proposals reflect popular sentiment that hospitals are falling short of their duty to the public. Growing wage inequality within nonprofit hospitals is especially significant because, unlike publicly traded corporations, these organizations are purportedly mission-driven. Nonprofit hospitals receive exemptions from state, federal, and income taxes in recognition of the “community benefit” they provide, such as the offering of social services and charity care.
In recent years, critics have questioned whether nonprofit hospitals are doing enough to deserve these exemptions: studies have shown that non- and for-profit hospitals provide comparable levels of charity care in terms of percentage of total expenses and that the amount of charity care provided does not increase as hospital profits grow. As Medicaid shortfalls are frequently cited as evidence of community benefit activity, it is crucial that nonprofit hospitals continue to serve Medicaid and uninsured patients to meet their legal obligations, even as they adjust to the changes ushered in by the Big Beautiful Bill.
In a country priding itself on its democratic principles, wage equality matters. It allows us to better sustain economic opportunity. The U.S. healthcare system employs ~11% of our nation’s workforce. These “essential workers” should be compensated commensurate with their contributions to keeping our hospitals running.
Wages within healthcare are deeply and increasingly unequal, and the financial burdens of the Big Beautiful Bill can either exacerbate or help alleviate this trend. We must ensure that patients and workers remain in focus as health systems adapt and restructure.