Public offended by USM raises, hospital salaries

Outrageous salaries for hospital administrators and outlandish raises for college administrators have recently surprised and angered many Mainers.

It's the latest example of an invidious problem rooted in a seemingly fair system of rewarding highly compensated public, nonprofit employees. 

On Sunday, March 18, the Sun Journal reported on the surprisingly large salaries sometimes paid administrators of remarkably small hospitals.

For instance, the Sun Journal revealed the CEO of Redington-Fairview General Hospital in Skowhegan, which has 25 beds, was paid more than the CEO of Central Maine Medical Center in Lewiston which has 250 beds.

Meanwhile, the Portland Press Herald revealed March 22 that 44 University of Southern Maine administrators had their salaries boosted between 5 and 41 percent after a job classification survey of similar positions at other colleges.

One employee, USM's executive director of university outreach, received a $34,515 annual raise to $118,000 per year.

The large raises come amid a freeze on cost-of-living raises for employees across the UMaine system and after USM had cut 118 positions since 2007.

"It's not fair to pay (employees) 20 percent less than people in similar positions at other universities," explained USM President Selma Botman.

Never mind countless thousands of Maine workers are paid less than employees in similar positions elsewhere.

Here's how this typically works in institutions like hospitals and universities, and why it has driven executive pay into the stratosphere.

These salary surveys are initiated or purchased by hospital  and college boards to see how top employees' pay compares to similar jobs across the country.

Invariably, they look at the numbers and find that a hospital CEO in Maine, a relatively low-income state, is not paid as well as others elsewhere.

But here's the real conceit of this system: Board members are generally loathe to give offense. And, of course, most boards believe their CEO is above average.

It's the Lake Wobegon effect named after Garrison Keillor's fictional hometown where "all the children are above average." Social psychologists call it illusory superiority.

If your CEO is in the 45th pay percentile the only "fair" thing to do is bump him up to the 65th or 75th percentile. He is, after all, obviously above average. Forgetting, meanwhile, that someone always has to be in the 45th percentile somewhere.

Meanwhile, this is happening across the country. Almost ever hospital board thinks their CEO is above average and must be compensated slightly better than the average CEO.

This is a relentless process that constantly forces administrative pay higher and higher.

Give that process 10 or 20 years and you have administrators who never leave and whose compensation is in the stratosphere.

Private businesses also need to retain good employees, but that decision is more often based upon actual employee turnover and the more carefully calculated risk of losing the truly exceptional employee.

And, in the end, a business can only afford to pay what its revenue allows. It is constantly balancing profitability and employee compensation.

Allowing public institutions to blindly follow these compensation studies will inevitably result in extraordinarily high salaries that shock and amaze the people who must pay them.

rrhoades@sunjournal.com

The opinions expressed in this column reflect the views of the ownership and the editorial board.

What do you think of this story?

Login to post comments

In order to make comments, you must create a subscription.

In order to comment on SunJournal.com, you must hold a valid subscription allowing access to this website. You must use your real name and include the town in which you live in your SunJournal.com profile. To subscribe or link your existing subscription click here.

Login or create an account here.

Our policy prohibits comments that are:

  • Defamatory, abusive, obscene, racist, or otherwise hateful
  • Excessively foul and/or vulgar
  • Inappropriately sexual
  • Baseless personal attacks or otherwise threatening
  • Contain illegal material, or material that infringes on the rights of others
  • Commercial postings attempting to sell a product/item
If you violate this policy, your comment will be removed and your account may be banned from posting comments.

Advertisement

Comments

Steve  Dosh's picture

Public offended by USM raises, hospital salaries

Sad ? 12.03.29 11 am - ish
A : No
" You think edeucation is expensive ? Try ignorance . " J . C . Watts ( r ) OK 1 9 9 5 . You will not find any black Republicans in Congress { correct me if i am wrong someone } but one m a y find several Hispanics . We l o v e Romneycare ® and Obamacare ® /s, Dr. Dosh http://www.letsmove.gov <- not necessarily an endorsement of Michelle , Sasha , and Melia :)

Joe Morin's picture

sad

The Bureaucracy is expanding to meet the expanding needs of the bureaucracy. While the rest of the world shrinks. I find it humorous that the argument for a wage increase is similar to the arguments used during the NFL free agency when position players are negotiating their contracts. The differences are that there are a finite amount of quality position players who can make a positive impact and as a result can produce large revenues for a team. When it comes to "administrators" there seems to be an endless supply. In my line of business people get rewarded for results. If I went to my boss and said I deserved a raise because my competitor at another company got a raise...well it wouldn't go well. Last I checked, enrollment hasn't been great lately. From what I hear, the community college has done well because of lower tuition. Anyone see the fine example of causality here?

Steve  Dosh's picture

. . ..i take that back , sad

. . ..i take that back , sad 12.03. 29 11:11 am-ish School Administrative Districts :)
We are firm supporters of the jr. and community colleges seeing how they were all dedicated to my grandfather in Florida ( the entire system :) i apologize ( just too use to seeing ppl immediately put down institution in here
Keep up the good works !
/s, Dr. Dosh and ohana , HI http://www.ocalastyle.com/styleadmin/newsadmin/templates/style-template....

Steve  Dosh's picture

Public offended by USM raises, hospital salaries

UMmMmm 12.03.26 19:40 hst •
We think they are worth it , Rex . What could be more important to our nation's future than health and education ? Oil ? Nobody wants cheap doctors and educators . If we did we'd move to TX . It's Wall St that's out of whack in the compensation dept . Bernie madeoff w/ US$Billions during the Bush B S bailout time period ( Bear - Stearns )
/s, Steve Dosh http://wearethe99percent.tumblr.com/

PAUL ST JEAN's picture

You think the Chief

You think the Chief Administrator of a 25 bed hospital in Skowtown deserves a higher salary than his counterpart in a 250 bed hospital in Lewiston? That's o.k. with you?

 's picture

Try actually reading the piece, Steve.

It's about hospital and university administrators - not doctors and educators. Did you ever receive life-saving hospital care due to the CEO's compensation package? Did one of your kids get an A+ in underwater basket weaving due to the college president's high salary?

What's out of whack are lefties who launch into a trite tirade at the drop of a buzzword.

Advertisement

Stay informed — Get the news delivered for free in your inbox.

I'm interested in ...