Hospital chiefs see modest gains

Chief executives at Massachusetts hospitals and healthcare systems didn't receive the gigantic raises last year that were common in 2005.

The heads of major local hospitals had to settle for modest pay hikes, and a few actually saw small pay cuts for the fiscal year that ended Sept. 30. That mirrors a national trend, according to Sullivan, Cotter & Associates, a Chicago consulting firm that advises hospitals on pay for executives and doctors. Nationwide, the median raise for hospital chiefs last year was 3.4 percent, the firm said, compared to 4.3 percent in 2005.

Massachusetts hospitals and other tax-exempt healthcare providers are required to file detailed financial reports -- including the salaries of top executives -- with the state attorney general's Office of Public Charities. The reports were made public last week.

Baystate Health system chief executive Mark R. Tolosky had the largest percentage raise of major healthcare providers surveyed by the Globe. The 14 percent increase brought his total annual compensation to $1.41 million. The system includes three hospitals, including Baystate Medical Center in Springfield.

Baystate Health prospered in fis cal year 2006. Revenue at the medical center, the largest part of the system, increased 9 percent to $733 million, and its operating margin -- a measure of profitability -- increased from 3.7 to 5.25 percent, according to filings at the Massachusetts Executive Office of Health and Human Services.

"The performance of the system was quite strong, not just from a financial perspective, but also in terms of quality of care and community involvement," said Dale Janes, chairman of Baystate's board of trustees and the compensation committee that sets Tolosky's pay. Janes said a retention bonus intended to keep Tolosky at Baystate accounted for half of his raise last year.

Some other chief executives got hefty raises at institutions that didn't show such clear indications of financial success.

Dr. David M. Barrett, president and chief executive of Lahey Clinic in Burlington, received an 11.8 percent raise, bringing his total compensation to $1.39 million. But Lahey's operating margin declined nearly one quarter and its operating surplus declined 15 percent, to $45.5 million. Other measures of the clinic's performance were positive: Net patient revenue was up 7.5 percent, and its capacity to pay its debt increased.

Rose Lewis, a spokeswoman for Lahey Clinic, said most of Barrett's $148,000 raise was made up of contributions to supplemental retirement plans.

At Children's Hospital in Boston, Dr. James Mandell got a 6 percent raise, bringing his compensation to $1.13 million. Children's operating surplus -- the amount of money it made from providing medical services -- declined 38 percent to $33 million, and its operating margin declined more than 40 percent to 3.21 percent.

In a statement, the hospital said, "Achieving operating margin is only one measure used by Children's Board of Trustees to determine compensation. Other measures include meeting goals related to patient safety and quality, customer service, and expanding services to the community."

It also cited expansion on Longwood Avenue, a new day surgery unit and other services at its Waltham hospital, investment in clinical information systems, and enhanced benefits and compensation for employees.

Several chief executives saw pay cuts last year.

Compensation for Dr. James J. Mongan, of Partners Healthcare and the highest-paid healthcare provider official in Massachusetts, dropped 7 percent from the previous year, bringing his total compensation to $1.96 million.

In fiscal year 2005, Mongan was awarded a 20 percent performance bonus, according to Thomas P. Glynn, chief operating officer of Partners, the largest healthcare system in Massachusetts. But Mongan didn't want a 20 percent bonus to become the norm, Glynn said, and even though the board offered him a similar bonus for 2006, he insisted on a 10 percent bonus.

In addition, Mongan had to cash out unused vacation time in 2005, which also boosted his pay compared to 2006.

In 2005, the hospital chief with the biggest raise was Elaine Ullian of Boston Medical Center, who saw her pay increase 54 percent to $1.37 million. But in 2006, her pay was cut 5 percent, to $1.3 million.

Paul Levy, chief executive of Beth Israel Deaconess Medical Center, also earned less in 2006 -- his compensation declined 4 percent to $961,082. A hospital spokeswoman said that while Levy's base salary increased slightly, a one-time payment of deferred compensation in 2005 bumped up his total that year.

Hospital heads with modest pay increases include John O'Brien of UMass Memorial Hospital in Worcester, who received a 5 percent increase, bringing his compensation to $1.33 million. In the previous year, he got a 38 percent pay hike. And Dr. Peter L. Slavin, chief executive of Massachusetts General Hospital, got a 5 percent raise, compared to 13.1 percent the previous year. His 2006 compensation was $1.05 million.

Warren Kerper, managing principal of Sullivan, Cotter & Associates' Boston office, said proposed changes by the Internal Revenue Service could lead to disclosure in greater detail of executive pay by hospitals and other tax-exempt organizations. Currently, compensation is broken into three categories -- compensation, benefits, and other payments -- but the new system would specify payments in seven categories. The change, to take effect in fiscal year 2008, will provide detail on bonuses, executive retirement plans, and other types of benefits.

Jeffrey Krasner can be reached at krasner@globe.com.