by Gwen Moritz
Posted 3/25/2013 12:00 am
Updated 8 months ago
Last month, in a Time magazine article critical of sometimes inexplicable medical bills, journalist Stephen Brill noted that “the American health care market has transformed tax-exempt ‘nonprofit’ hospitals into the towns’ most profitable businesses and largest employers, often presided over by the regions’ most richly compensated executives.”
While their profitability varies, nonprofit hospitals in Arkansas are certainly among the state’s largest employers. This week Arkansas Business premieres a new list of the state’s highest-paid nonprofit employees, which reveals that nonprofit hospital executives and physicians can be extremely well-paid.
They are not, however, more “richly compensated” than executives of the state’s publicly traded companies, which may be appropriate if Brill is correct in his assertion that nonprofit hospitals are more “akin to low-risk, must-have public utilities” than the domain of “high-risk entrepreneurs.”
(Buy the List: An online-only expanded list of the highest-paid nonprofit employees can be purchased in our online store here.)
The list is topped by Russell D. Harrington Jr., CEO of Baptist Health of Little Rock, the state’s largest health care provider. His compensation package in 2011, the most recent year for which the IRS Form 990 is available, topped $1 million — the only one that reached the seven-figure mark.
(For a full explanation of the list research, click here.)
A total of 104 nonprofit employees across the state — some executives, many medical doctors, some both — were paid more than $300,000 in the most recent fiscal year for which 990 forms are available. All but six in that income bracket work for nonprofits engaged in health care.
The highest-paid nonprofit executive who is not employed in the medical field is Don Bacigalupi, No. 20 on the list. He was paid salary and other compensation that totaled just under $600,000 as executive director of Crystal Bridges Museum of American Art in Bentonville in 2011, the year the museum funded primarily with Walton family wealth opened to the public.
Bacigalupi, the only non-medical employee among the 34 paid more than half a million dollars, was named president last month. His successor as executive director, Rod Bigelow, was promoted from deputy director of operations and administration, for which he was paid salary and other compensation of $285,000 in 2011, landing him at No. 116.
Other highly paid nonprofit employees whose work is outside of health care are:
- Frank Tugwell, CEO of Winrock International Institute of Little Rock (No. 43, $452,000);
- Rick Niece, the retiring president of University of the Ozarks (No. 70, $362,600);
- J. Timothy Cloyd, who recently resigned as president of Hendrix College at Conway (No. 75, $348,000);
- Peter Lane, CEO of the Walton Arts Center at Fayetteville whose guest commentary appears on Page 27 (No. 83, $334,000); and
- Bruce R. Lindsey, CEO of the William J. Clinton Foundation of Little Rock (No. 95, $319,600).
Joining Harrington in the top five highest-paid nonprofit employees are:
- Robert P. Atkinson, the retired president and CEO of Jefferson Regional Medical Center in Pine Bluff, who still collected more than $900,000 in the fiscal year that ended June 30, 2011, although he had gradually retired in 2009-10;
- Dr. Louis Elkins, a cardiovascular surgeon whose 2001 pay at Baxter Regional Medical Center in Mountain Home topped $867,000.
- Gerontologist Dr. David Lipschitz, who was paid $840,500 by St. Vincent Infirmary in Little Rock in the year that ended June 30, 2011. He has since gone into private practice; and
- Dr. David Chambers, who was paid $833,000 by Delta Memorial Hospital in Dumas in the fiscal year that ended in mid-2011.
Compensation for nonprofit employees is gently regulated by the IRS, which requires only that nonprofits pay executives “fair and reasonable compensation,” according to a 2011 white paper by GuideStar, a nonprofit organization that compiles nonprofit financial reports and makes them available online.
If the IRS determines that a nonprofit employee has overpaid, he or she can be required to repay the overpayment plus a penalty. Members of the board of directors who approved or failed to prevent the excess pay can also be required to pay a penalty equal to 10 percent of the overpayment.
“We talk to both sides of the house,” GuideStar spokeswoman Lindsay J.K. Nichols said last week. “We talk to donors who think nonprofit executives are paid outrageously, and we talk to nonprofit executives who think they aren’t paid nearly enough.”
GuideStar doesn’t take sides, she said.
“We never comment on specific organizations. We can only say this is what the IRS requires: You have to compare your salary to someone else based on revenue and mission.”
In which case, even Russ Harrington’s million-dollar salary may look modest. Baptist Health’s many affiliates have total revenue of about $2 billion a year and close to 8,000 employees. By comparison, Stephen C. Reynolds, the CEO of 12,000-employee Baptist Memorial Health Care of Memphis, which operates NEA Baptist Memorial Hospital at Jonesboro, was paid nearly $3.3 million in the fiscal year that ended Sept. 30, 2011.