Cumberland Times-News

Opinion

October 11, 2012

WMHS board responds to inquiries about executives’ compensation

The Board of Directors for the Western Maryland Health System is charged with the fiduciary responsibility of assuring that area residents have access to essential health care services. In addition to overseeing the quality of those services, we also are obligated to ensure the appropriate use of funds.

We are fortunate to have skilled and experienced leaders on our senior management team. Running a hospital in today’s environment is a most challenging job based on the complexity of what hospitals do. From the routine to the catastrophic, 24/7 access to care is provided for all patients, regardless of their ability to pay. Virtually all phases of our operations are highly regulated, and our physical facilities must provide each patient with a safe, quality experience. It is becoming increasingly more difficult to keep the hospital financially viable as payment reform in Maryland and national healthcare reform efforts continue.

The WMHS Board of Director’s compensation philosophy is based on our commitment to attract and retain highly competent executives to further our mission. We compete with hospitals across the country for talented individuals to join WMHS, and our salaries must be comparable to hospitals of similar size and complexity.

The compensation for the executive team at WMHS is set by the WMHS Board of Directors based on the recommendation of our Executive Compensation Committee. This committee works with Mercer, a national firm that specializes in wage and compensation issues, to review and determine executive compensation.

Mercer provides the board with data from national compensation surveys of hospitals that are like WMHS. These hospitals are similar in size and scope with $300 million in annual net operating revenue and based in similar locations, both in the region and across the country. The Executive Compensation Committee bases its recommendation on this competitive market analysis and targets compensation at mid-range of comparable institutions.

As a not-for-profit, tax-exempt organization, WMHS also must meet IRS requirements ensuring that our executive compensation is reasonable and appropriate. Mercer provides documentation that WMHS is providing executive compensation at reasonable levels with like organizations in Maryland and across the U.S.

Another benchmark used for comparison is Maryland’s ranking of administrative and general expenses according to equivalent inpatient days. According to the most recent data available, WMHS ranks among the lowest in the state, coming in at 45 out of 48 hospitals in Maryland.

We believe the community is well served to have the caliber of individuals who comprise our senior management team. They had the experience and skills necessary to bring a new state-of-the-art medical center to this community as well as to lead this organization through these challenging times.

It is important, however, to clarify that the WMHS 990 filing for 2010 includes a one-time, 3-year deferred pension payment for Mr. (Barry) Ronan that was held until the successful opening of the new Western Maryland Regional Medical Center November 2009. His base salary for that year was approximately $475,000.

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