The suggestion sparked more debate on the issue of hospital pay equity, which the Lown Institute measures on the Lown Hospitals Index. Here’s more on why fair pay matters, how the Lown Index measures it, and which hospitals are already leading the way on pay equity.

Why pay equity matters

In a Health Affairs blog last year, Lown leaders wrote that on average, nonprofit hospital CEOs make eight times the rate of hospital workers without advanced degrees (such as custodial staff, kitchen staff, and medical-records personnel) in 2018. However, this ratio varied widely. Some hospital CEOs were paid at twice the rate of other workers, while the highest paid received 60 times the hourly pay of general workers. 

We measure pay equity on the Lown Index because it is a powerful tool for social responsibility. Hospitals are often the largest employers in the region, so by paying workers fair wages, hospitals are putting money back into their communities. Income is one of the most impactful social determinants of health. Increasing their workers’ income can dramatically improve hospital workforce’s vitality. Boosted employee morale translates to improved retention and increased engagement and productivity. Hospital pay equity truly is a triple win for the hospitals, workers, and communities they serve.

The best hospitals for pay equity

The Lown Hospitals Index for Social Responsibility measures hospital pay equity using IRS 990 filings and CMS hospital cost reports. Pay equity is measured as a ratio of CEO hourly wage to the hourly wages of hospital workers without advanced degrees. Hospitals with lower ratios receive a better grade on pay equity. 

Below are the Top 10 Hospitals for Pay Equity on the Lown Hospitals Index from 2022. While most of these hospitals are very small hospitals in rural locations, the #1 hospital is MUSC Medical Center,  a 400+ bed hospital in Charleston, SC. At these ten hospitals, the average CEO salary was $75,000, and the hourly wages of CEOs were about the same as those of other hospital workers. 

Clearly, hospitals can both stay afloat AND pay their staff equitably, they’re not mutually exclusive. Other hospitals should take note from these institutions — especially if workforce vitality is a priority.

Are you a Top Hospital? Learn how to share your performance!

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One thing the COVID-19 pandemic highlighted is just how many healthcare workers we have in this country. The most recent Census data shows around 22 million workers in the industry, around 14% of the entire workforce. With repeated hospital worker strikes across the nation over the past year, it’s worth asking: How are so many vital workers struggling to make ends meet?

Essential healthcare support workers are undervalued and underpaid

While physicians and nurses are unquestionably at the core of most healthcare teams, they comprise less than 20% of all essential healthcare workers and they receive the most accolades. According to GlassDoor, the average physician at a large health care center like Massachusetts General Hospital can expect a yearly income in the hundreds of thousands. This is not the case for residents, who start off at a 70k salary and work insane hours leading to burnout. But what about the other workers who are vital to hospital functioning and are also on the frontlines of the pandemic?

Pharmacy technicians, crucial to ensuring accurate medication dispensing, take in less than 50k per year at MGH on average. Same with their mental health counselors, oral and maxillofacial surgical assistants, and anesthesia technicians, to name a few. That’s not enough money to live in your own apartment in a state like Massachusetts, nevermind if you have kids or dependents. 

Other healthcare support positions such as janitors, food prep, and home health workers pay even less. The nearly 7 million person workforce has a median hourly wage of $13.48, which amounts to less than 30k per year assuming no time is taken off. An estimated 81% of these workers are women, and 46% are Black or Hispanic. These jobs are crucial to a safe, effective healthcare system. If a Massachusetts-based worker has two kids, they qualify for MassHealth (Medicaid). Why have we built a system that pays essential workers so little that they need state assistance to survive?

The C-Suite Swindle

At the same time as essential workers are underpaid, hospital CEOs are lining their own pockets. According to our analysis from earlier this year, the average nonprofit hospital CEO makes 8 times what workers make. The least equitable hospitals have a pay ratio of more than 60:1. 

Compensation is primarily derived from the volume of patients coming through the hospital doors, also called “heads in beds.” As that number rises, worker wages tend to increase – but not nearly at the same rate as CEO pay. Location is also a factor but it is clear that the pay ratios between the C-suites and the workers on the actual frontlines are atrocious across the board. Even worse, hospitals engage in union-busting and present paltry offerings like gift vouchers to the hospital cafeteria and pizza parties to frustrated employees rather than just raising wages and hiring more workers to relieve staffing shortages.

Hospitals also spend an inordinate amount of money on facilities and expansion. When the Cleveland Clinic built a new multispecialty hospital in Abu Dhabi, they spent an estimated $2.5 billion. Meanwhile, their phlebotomists are paid less than 30k per year, below the national average. Our analysis found that Cleveland Clinic’s pay equity ratio for this year was 34:1. Their CEO was paid $3.3 million in 2019, including compensation as CEO of the Cleveland Clinic. That breaks down to about $1273 per hour. In comparison, their workers without advanced degrees are paid $38 per hour. If the nonprofit system is neither paying their workers fairly nor investing in their communities the same way their communities have invested in them, it seems clear that these systems are swindling nearly everyone outside of the C-suite.

We need to deeply evaluate our priorities and values when it comes to the workers who keep us alive and healthy. They should not feel simultaneously overworked and underpaid while they hold the fate of another in their hands. Hospitals can’t function without all of their employees at every level, from the person cleaning the floors to the person cutting a patient open for surgery. We deserve a health care system that takes care of all of us.

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