Hospital CEO salary lower than average for small hospitals

Tom Sasvari

The Recorder

MANITOULIN––The Chief Executive Officer of the Manitoulin Health Centre (MHC) does not receive the same kind of salary, or the perks, that other hospital CEOs in the province do.

In fact, Georgie Hari, chair of the MHC board states, that in the case of Derek Graham, MHC CEO, “even compared to other small hospitals in Ontario his salary is less than the average or median of other CEOs, and he doesn’t receive the bonuses or any of the perks other hospital CEOs receive.”

Ontario hospitals became subject to provisions of the Freedom of Information and Protection of Privacy Act on January 1, 2012. Although public servants who earn more than $100,000 already have their salaries posted on the so-called “sunshine list,” many details in hospital executives’ contracts have not been made public until now.

New Democrat party Leader Andrea Horwath recently reiterated her cal1 for a cap on hospital CEO salaries. She is proposing a maximum $418,000 annually, twice the salary paid to Premier Dalton McGuinty. With patients facing closed emergency rooms and growing wait times, “there’s no way to justify spending scarce health dollars on private clubs and $700,000 salaries,” said Ms. Horwath in the January 4, 2012 edition of the Sudbury Star. “We need to get our priorities in check and CEO salaries down to levels we see in other provinces.”

The NDP leader said salaries for hospital CEOs are as high as $758,000 a year. In addition, some executives receive benefits such as memberships to health clubs worth several thousand dollars a year and thousands in car allowances.

Ms. Hari says the MHC board goes through a diligent process in looking at what salary it pays its CEO. “A committee is formed that reviews the CEO’s performance on an annual basis, relative to the objectives we have set,” noting a new five-year contract was recently reached with Mr. Graham, “We also go through information provided by the OHA (Ontario Hospital Association) to research the salaries paid to other CEOs, especially to those who run the size of hospitals we do, their responsibilities, and we receive legal advice.”

“We do a lot of research and homework,” said Ms. Hari, who pointed out that prior to a contract being reached with its CEO, it has to be approved by the hospital board. She reiterated, “Mr. Graham’s salary is lower than the average and median of all hospitals even compared to other small hospitals in the province, and with two hospital sites on the Island this is definitely taken into consideration. In the services provided and the geographical area involved, there are additional challenges with being a CEO of a hospital on Manitoulin.”

Mr. Graham’s new five-year contract, which is available on the MHC website, will run for a period of five years, commencing February 6, 2012 and ending March 31, 2017. His pay will remain status quo from February 5, 2012 to March 31, 2012. “Effective April 1, 2012, he will receive an annual salary of $174,900 less statutory deductions and pension plan contributions as compensation for services rendered and for covenants provided by the executive director and CEO relating to the terms of this agreement. Thereafter Mr. Graham will be entitled to yearly increases, at the discretion of the board.”

“MHC shall provide the opportunity for Mr. Graham to earn a lump sum payment amount of up to 10 percent of the CEO’s base salary, less required statutory deductions, for the year ending March 31, 2013 and thereafter on an annual basis by April 30. This lump sum payment will be based on the CEO’s performance, as measured in his review by the board on achieving the factors set out in the agreement, the duties and responsibilities as outlined in the position description and meeting any performance targets set annually by the board,” the contract continues.

Under the agreement, “the CEO will be reimbursed for all reasonable expenses such as travelling, attending professional conferences and/or being a member of a related professional association actually and properly incurred by him in the connection with his employment with MHC as determined by MHC. In any event, any professional membership expenses will be subject to the discretion of the MHC and such expenses shall not exceed the budgeted amount in any one fiscal year and must be approved in advance by MHC,” the agreement states. It also indicates Mr. Graham receive a11 other benefits, the same as all managers in the MHC receive, as well as a vacation allotment of five weeks. He receives no other perks, pointed out Ms. Hari. As she pointed out, the MHC board establishes the salary rate, and they do market comparisons as to what other executive salaries across the province are set at, based on bed size of a hospital, and what is affordable.

And, she continued, Mr. Graham’s salary is less than the average or median for other smaller-or larger hospital CEOs in the province. For instance, his salary is lower than CEOs in Kirkland Lake and New Liskeard who receive salaries of over $190,000.

“We are very fortunate to have the great health care we do on the Island,” said Ms. Hari. “And we are quite comfortable with Mr. Graham’s salary and the services he provides, in fact he provides services above and beyond the call of duty.”

“No, he doesn’t receive any perks, living on Manitoulin Island would be the only perk he gets,” she said. She pointed out Mr. Graham, “does receive the standard benefits our other employees get, but nothing extra.”

“The OHA had suggested all hospitals in the province come out with the figures on the salary and benefits that are provided to all hospital executives and we certainly complied, we want to be as accountable and transparent as we can,” added Ms. Hari.