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Getting Rich at New York Presbyterian Hospital

Pain Pays

by RAYMOND LAWRENCE

New York Presbyterian Hospital is among the top handful of the most prestigious hospitals in the U.S. It is striving to become number one. It has already become number one in a way that is hardly commendable.

Former New York Governor Eliot Spitzer revealed publicly last year a well-kept secret, that New York Presbyterian was paying its top eight executives an annual aggregate salary of over $20 million. He cited 2004 figures, which today are undoubtedly higher. The CEO, Herbert Pardes, netted over five million, which means that the next ranking administrators netted an average of over two million. This must be far and away the most extravagantly paid hospital leadership team in the world.

The fact that the eight administrators of New York Presbyterian are taking annually only a few million each rather than the hundreds of millions often taken by executives in the business world doesn’t extenuate the offense.

A great many if not most of the hospitals in this country were founded by religious leaders for eleemosynary, that is to say, charitable purposes. The motivation was to provide health care for rich and poor alike, regardless of ability to pay. Public benefactors for generations have given their wealth and made hospitals beneficiaries of their wills. Great numbers of volunteers have for generations provided supplemental staffing for hospitals at no cost. One can still read plaques in the old halls of hospitals where various religious groups have raised funds to “endow in perpetuity” beds for the poor.  A long-standing tradition in this country is violated when anyone accrues excess wealth from work in an institution begun and sustained through the years by charitable contributions.

How can a volunteer, giving time to assist the sick, work side by side with a person raking in several million dollars a year in salary? How can a hospital staff person trying to survive on an annual salary of $50,000 work for and respect an administrator who takes home during the same time several million? How can an institution maintain it tax-exempt status while making its executives filthy rich? How can hospitals pay excessive salaries and complain about hemorrhaging money caring for patients who are unable to pay? Why should benefactors consider naming in their wills an institution whose budget includes the gaudy enrichment of its senior executive officers?

Burger King and General Motors have no volunteer corps, nor do they receive benefactions from the estates of the wealthy deceased who wish to leave something good behind when they’re gone. Commercial businesses are expected to garner profits for owners, stockholders, and employees. The more the better. That’s capitalism. And failing to make a profit, they will likely go out of business. If they fail financially, the public can make hamburgers at home and, like the Cubans, maintain the old car. Hospitals were not founded as commercial enterprises. The public cannot afford for a hospital to go out of business unless replaced by another. Hospitals do not—or should not—make profit from the sick. Nor should any employee be made excessively wealthy from work in a hospital.

When charitable Presbyterians founded Presbyterian Hospital in New York in the late 19th century, they specified in the charter that the chief administrator should always be a Presbyterian. It is right and proper that this restriction has been annulled over time by the Board of Trustees. But the spirit of the requirement might appropriately be resurrected both for New York Presbyterian and all other hospitals in this country, namely, that administrators be endowed like the founders of Presbyterian with enough social idealism and generosity of spirit as to be able to work for salaries that are actually commensurate with their labor.

The median salary for CEOs in charitable institutions in 2006, as reported by Chronicle of Philanthropy, was $315.969. No one could doubt that any hospital in this country could find able and talented administrators who would happily work for annual salaries of say, $300,000 to $500,000, or perhaps a little more, and consider themselves well recompensed. The likes of a Nobel  prize winner might appropriately expect a little more. But $20 million plus divided among eight administrators is patently excessive.

The American hospital is changing, and not for the better. They are morphing into just another corporate venture in the capitalist environment. “Patients” have morphed into “customers.”  Hospitals advertise in the media and compete for customers as any other business venture. And now the administrators are enriching themselves. Medical care, whether socialized or private, must be founded on care and generosity of spirit, not on the profit motive. The lust for big money is not compatible with the charitable and hospitable approach to healing that is the spirit of the institution we have known as the hospital.

By any measure the medical system in the U.S. is currently in crisis. In times of crisis those in power are always tempted to take the money and run. Apparently that is what is happening at New York Presbyterian Hospital. Hospital CEOs everywhere will be tempted to follow this leadership.

The generous humanitarian spirit that inspired the creation of most American hospitals originally, and has drawn so many compassionate people into health care professions, and attracted the generosity of persons wishing to leave behind a generous legacy, is disappearing before our eyes.

Presbyterian Hospital is a national pace setter. The pace it is setting this time is ominous. Perhaps it’s time to give Presbyterian Hospital back to the Presbyterians, or to some comparable eleemosynary agency.

Raymond J. Lawrence is an Episcopal cleric, recently retired Director of Pastoral Care, New York Presbyterian Hospital, and author of numerous opinion pieces in newspapers in the U.S., and author of the recently published, Sexual Liberation: The Scandal of Christendom (Praeger). He can be reached at: raymondlawrence@mac.com