Stevens Hospital’s chief executive Michael Carter, whose annual base salary is $364,434, can earn up to 30 percent more in incentive pay if he achieves a long list of goals this year.
Based on his current salary, that would mean as much as $109,330 in extra pay.
In order to earn the incentive pay, the taxpayer-supported hospital must satisfy more patients, make more employees happy and make a bigger than expected profit by the end of the year.
Carter was hired in 2006 to try to help revive a hospital that was bleeding money. Losses hit $5.8 million in 2000 and $2.67 million in 2004. In 2005, losses totaled $889,000.
The string of financial losses was broken during Carter’s first year at the hospital. The $1.25 million profit recorded in 2006 was its first profit in four years.
In additional to his base salary, part of Carter’s compensation includes incentive pay, with goals and rewards set each year. The 2008 incentive plan, outlined in a five-page document, was approved Wednesday. The hospital’s five-member, publicly elected board can modify it during the year.
Acting board chairman Fred Langer said he often is asked about Carter’s salary.
“Anytime I’m out talking about the hospital, it never fails to come up,” he said. “It’s tough when you’re dealing with a public hospital. The amount of money these people get, it does make people stop and pause, including board members.”
Still, Carter’s overall compensation is at the 50th percentile nationally, he said. Half of chief executives at hospitals of similar size make more and half make less.
The board offers the incentive pay to attach progress Carter makes on specific goals directly to his overall compensation, Langer said.
It’s a common practice in the complicated business of hospital administration.
“I do feel like I earn it, but I recognize it’s a big number,” Carter said. “Hospital chief executives make a lot of money,” he added. “I’m not being paid more than my peers.”
Stevens Hospital, its clinics and other businesses have overall net revenues this year of $150 million. The hospital will get $1.9 million from a maintenance and operations levee and $2 million from bonds.
Essentially, Carter’s incentive pay will be determined on a points system, in part on how satisfied patients are about their care, hospital spokesman Jack Kirkman said. Surveys are sent to every patient who comes to the hospital.
So some of Carter’s incentive pay will be based on how much growth there is in satisfaction scores, which include reducing the amount of time it takes emergency room patients to be treated and how patients rank their care.
Another part of the incentive pay will be based on the hospital’s financial performance.
For example, the hospital has a goal this year of making $3.2 million in profit. Carter would get the maximum number of points in this category if the hospital makes an additional $500,000, for a total profit of $3.7 million, Kirkman said.
Last year, Carter received a 6.4 percent annual raise, bringing his annual base salary to $364,434. He also received $49,401 in extra pay for reaching goals set for him in 2006, which included improving the hospital’s financial standing.
His incentive pay for 2007 has not yet been set because the hospital is still waiting for accountants to wrap up the hospital’s year-end financial statement. Part of the incentive pay depends on the hospital’s profit.
In November, hospital officials estimated its profit would hit $2.4 million.
Any money awarded under the incentive plan just approved by the hospital board will be paid next year, after the hospital’s year-end financial statements are completed.
Herald reporter Sharon Salyer at 425-339-3486 or salyer@heraldnet.com.
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