Millionaire health care?
With high costs and insurance premiums in Garfield County, focus falls on pay of a hospital’s chief executive
Concern over high individual health insurance premiums in Garfield County under the Affordable Care Act is putting a spotlight on the costs of medical care.
That spotlight is falling in part on the cost of executive pay at Valley View Hospital in Glenwood Springs, and specifically the million-dollar total compensation package of its chief executive officer, Gary Brewer.
Peg O’Brien, a physical therapist in Woody Creek outside Aspen who worries about the rising costs of health care in the Roaring Fork Valley, said she would suspect executive and other salaries contribute to those costs.
“From my understanding, the higher the salaries and overhead of a hospital, the higher the cost of care, therefore the higher the premium for everyone,” she said.
The cost of Garfield County individual and small-groups premiums has gotten considerable attention since they soared as part of implementation of Obamacare in Colorado. The state Division of Insurance lumped Garfield into a resort-region rating area that also includes Pitkin, Eagle and Summit counties, resulting in what are being called the highest rates in the country for those not eligible for financial assistance under Obamacare.
Garfield County commissioners have threatened to sue the state, questioning the fairness of the state’s rating area determination for Garfield residents. But some residents also are questioning the costs of care within the county, while questions about Brewer’s compensation are being raised everywhere from Facebook postings to a recent Glenwood Springs Rotary Club meeting. There, during a presentation by Valley View Chief Financial Officer Larry Dupper on the hospital, a Rotarian asked about what Brewer makes, and Dupper declined to say.
The answer — not to mention information about Dupper’s pay — can be found on what is called Intermal Revenue Service Form 990, a return that must be filed by organizations exempt from income tax and includes compensation for certain officials. For 2012, that form lists total reportable compensation of $1,010,889 for Brewer — an amount that includes base salary, bonus pay, benefits and other income — and $558,363 for Dupper.
‘Heck of a task’
The Division of Insurance has launched a study of health care costs in response to concerns about premiums in some areas. Division spokesman Vincent Plymell said the study is focusing on such things as claims data, and patterns and drivers behind costs. He doesn’t think it looks at something as specific as CEO pay for health care providers, although that pay may be a part of larger numbers being analyzed.
“I think it’s a question worth asking. … It’s not something right now I think we’re looking at explicitly,” he said.
In fact, Plymell said he will suggest that the division look into the issue of executive pay.
“I think it’s a valid question,” he said.
Brewer’s pay is of little concern to some, including Garfield County Commissioner John Martin.
“You could always be envious but the other (thing) is, does he earn his pay? That would be up to the board of directors,” Martin said.
He calls running a hospital of Valley View’s size and employment level “a heck of a task.”
As for what Valley View’s board pays Brewer, “That’s one of those decisions you make on market, availability and ability” in terms of the pool of CEO candidates, Martin said.
Valley View board member Jeff Carlson, who was board chairman when Brewer was hired, says Brewer’s compensation is entirely justified based on factors such as the nearly 17 years he’s spent on the job, the 1,000 employees he oversees, and the quality of care Valley View provides.
“You’re not going to find another hospital in a town of 9,000 that can provide the access, the quality of care at the competitive price we do and that has the leadership that has attracted the quality of medical staff, physicians, and support staff.
“We’ve got something special here and I think the community in general recognizes that,” said Carlson, the owner of the local Ford dealership.
“… In life you know when you’ve got the right guy and the right thing going and that’s what we’ve got with Gary Brewer and his team.”
Brewer’s salary in 2012 was $561,000, Carlson said. His total compensation also includes a bonus based on factors such as financial performance, patient satisfaction, and performance in overseeing the hospital’s construction project. It also reflects income related to factors such as benefits including a retirement package.
Carlson said Brewer’s pay is at about the 90 percent range when looking at CEOs of similar hospitals, meaning it’s about 90 percent of the top pay anyone receives in that category.
Community Hospital in Grand Junction reported compensation of $510,476 for president and CEO Chris Thomas in its 2011 Form 990. On its 2012 form, St. Mary’s Hospital in Grand Junction reported about $575,000 in total compensation for president and CEO Michael McBride and $367,607 for Forest Binder, chief financial officer and vice president of finance.
For 2009 St. Mary’s reported total compensation of $706,517 for then-CEO Robert Ladenburger, including $454,085 in base pay. For 2008, it reported $948,149 in total compensation for him even though his base pay was lower. Dan Prinster, vice president of business development at St. Mary’s, said he believed that at some point before Ladenburger’s departure St. Mary’s shifted his retirement benefits from one retirement tool to another, creating a taxable event showing up as income and likely explaining a bump in reportable income.
The Sisters of Charity of Leavenworth founded St. Mary’s. Prinster says Sisters of Charity looks at hospital size, admissions, employment and other factors in setting executive salary. St. Mary’s is the largest hospital between Denver and Salt Lake City and is Mesa County’s second-largest employer, with about 2,000 employees, and when trying to recruit someone to run an organization of such size the pay needs to reflect that, Prinster said.
Carlson points to the case of Rulon Stacey, CEO of the 270-bed, 2,000-employee Poudre Valley Hospital in Fort Collins. He received total compensation exceeding $1.7 million for 2011.
Prinster said it can be a challenge recruiting executives to live in a more rural area, so pay is one lure. And he and Carlson also noted that their hospitals are competing against the private sector, which is able to offer stock incentives as another form of compensation.
Brewer “could have been someplace else and made a whole lot more money,” Carlson said.
He said Valley View hired Brewer because of his experience in the for-profit world, and in areas such as setting up outreach clinics and overseeing construction projects, undertakings the hospital has been heavily involved in since Brewer’s arrival.
Although Brewer’s long tenure has contributed to his increased pay, Carlson believes the continuity in leadership has been important, and that hospitals that experience frequent turnover in leadership incur what may be hundreds of thousands of dollars in lost production and other costs due to problems such as low employee morale.
Valley View’s 2012 Form 990 also lists total compensation of many hundreds of thousands of dollars for several doctors, including two neurosurgeons receiving more than $900,000 apiece. Carlson and Valley View board chairman Steve Vanderhoof said that reflects a trend in health care in which doctors work directly as hospital employees.
O’Brien, the physical therapist, said hospitals such as Valley View and Aspen Valley provide good care, but their cost of care is out of reach for a sizable number of middle-income people.
She thinks lack of competition in the Roaring Fork Valley and lack of transparency regarding costs are part of the problem, and expects that transparency and attention to issues such as executive pay will increase as the Affordable Care Act continues to be rolled out.
“Up until now it has been out of our hands. It was between the provider and the insurance (companies) to create their agreement and it was buyer beware as far as health insurance, but now this has become a public issue that all of our political leaders and (elected) representatives are participating in, and we are, through communicating with them.
“It’s a complete shift from a business contract relationship between a provider and a corporation to a public service. It makes sense that there will be more scrutiny, thus more adjustments to literally meet the goal of providing affordable care.”
The current health care premium situation in Garfield County has prompted some to point out how much more cheaply they can get procedures such as MRIs in places such as Denver. Glenwood Caverns Adventure Park is offering to pay for an overnight stay and for the missed time for work for employees who are able to obtain cheaper non-emergency procedures outside the region.
Carlson says the average costs of a number of common procedures at Valley View are cheaper than the state average for hospitals. He said it’s not fair to compare charges to those at a surgery center, when a hospital has to be open 24 hours to treat emergencies as well, and takes on charity cases as well.
“As a not-for-profit, our mission has to be that we take care of all of those people,” he said.
Asked whether Brewer wanted to comment on his pay, Valley View spokeswoman Stacey Gavrell said board members are speaking for the hospital on the matter.
Steve Reynolds, a Glenwood Springs businessman and former chairman of Club 20, said he doesn’t think he has a problem with what Brewer makes as long as it’s the fair market value. He considers it all relative, compared to pay for professional athletes, and credits Brewer and Valley View for the many improvements in services the hospital has achieved over the years.
“Certainly we have a pretty solid hospital here. If I get sick or my family gets sick, I feel pretty comfortable that most of the services that I might ever need are right here in Glenwood Springs, and there is a price associated with it,” he said.