While living in New York City many years ago I was scheduled to undergo shoulder surgery at the Hospital For Special Surgery, which is renowned for that sort of procedure. An orthopedic surgeon who came highly recommended said I had a torn shoulder labrum and advised that surgery was the only repair option. When I asked about the surgery’s risks, he joked, “death.”
I wasn’t laughing.
Fortunately, a family member who’s a doctor at St. Michael’s Hospital in Toronto suggested I send him my MRI. He shared it with a staff rheumatologist who advised that I only had a partial tear and that it possibly could heal by itself. The rheumatologist advised that at St. Michael’s the recommended treatment would be physical therapy and if my shoulder didn’t heal, then surgery would be the option. I cancelled my surgery, underwent some physical therapy, and within weeks I was no longer experiencing pain or mobility issues. I can no longer recall what shoulder I injured.
Therein is lesson No. 1 about Canadian medicine. Hospitals in Canada truly function as nonprofits, so doctors aren’t under pressure to perform or recommend needless but lucrative surgeries.
Here’s lesson No. 2: Canadian hospitals can’t afford to pay their CEOs mega millions to do their jobs. Exhibit A: Kevin Smith, CEO of University Health Network, Canada’s largest academic hospital system and the biggest health research institution in North America.
Ready for this? Smith in 2020 received $844,992 CDN in total compensation, which is about $674,312 in U.S. greenbacks. Yes, I triple checked the number. Indeed, I was so taken aback I reached out to a UHN PR person to make certain I read the number correctly.
It’s impossible to compare 2020 CEO salaries of nonprofit U.S. hospitals because they aren’t required to disclose executive compensation in a timely manner. According to Cause IQ, which tracks compensation of nonprofit hospital CEOs, top executives for the largest hospitals and health systems earned tens of millions in compensation in 2018. Ernie Sadau, CEO of Christus Health in Texas, made $13.5 million, Steve Corwin earned $12.4 million running New York Presbyterian, Peter Fine Fache pulled in $11.3 million overseeing Arizona’s Banner Health, and Anthony Tersigni of St. Louis-based Ascension Health earned $10.6 million.
CEOs of regional hospitals also did well. In 2019, John Fox, CEO of Michigan’s Beaumont Health, earned $6.8 million. Jim Skogsbergh, CEO of Chicago-based Advocate Aurora, earned $6 million in 2018, almost half of the $11.7 million he earned a year earlier.
America’s highest paid hospital executive in 2020 was likely HCA’s CEO Sam Hazen, who pocketed $30.4 million. (HCA is publicly traded and therefore required to disclose executive compensation within months after its awarded.)
Toronto’s UHN network includes Toronto General, Toronto Western, The Princess Margaret Cancer Centre, Toronto Rehabilitation Institute, and The Michener Institute of Education, which is devoted exclusively to applied health sciences education. All UHN’s institutions would be among the most prestigious in every American city.
Despite being paid a pittance compared to what U.S. hospital executives are compensated, UHN’s Smith is well credentialed. He holds a Doctor of Philosophy degree and is certified in corporate governance by the Institute of Corporate Directors and the Harvard program in effective governance. He also completed the Wharton School CEO program for health care leadership and the University of Toronto’s Rotman Business School Director’s Education Program.
Smith is also Chair of the Canada Foundation for Innovation, Chair of the Council of Academic Hospitals of Ontario, a member of the Ontario Premier’s Health Results Table, an advisor to Ontario’s chief innovation strategist and a special advisor to Ontario’s Minister of Health. As well, Smith is a Professor at McMaster University’s medical school in Hamilton. Prior to being named CEO of UHN, Smith was the CEO of the St. Joseph’s and Niagara Health Systems.
UHN isn’t the only Canadian hospital system attracting a world-class CEO and paying extremely modest compensation by U.S. standards. Another is the Sunnybrook Health Sciences Centre in suburban Toronto, home to Canada’s largest trauma program and where the largest number of burn patients are treated in Ontario. Sunnybrook also houses Canada’s second largest cancer centre and it cares for one out of every five babies born in Ontario weighing less than three pounds. Sunnybrook was founded as a veteran’s hospital and remains Canada’s largest facility for the care of war veterans.
Sunnybrook’s CEO is Andy Smith, a surgical oncologist specializing in colon cancer who previously served as the hospital’s chief medical executive and earlier headed the hospital’s general surgery and cancer divisions. Smith also served as chair of the Division of General Surgery at the University of Toronto’s medical school.
Smith in 2020 earned $788,372 CDN in total compensation, or $629,128 in U.S. dollars.
I’ve witnessed the quality and compassionate care Sunnybrook offers. My father in his later years was treated there, including a couple of stints in the hospital’s critical care ward where I witnessed a miracle. The patient next to him was a young woman who was transferred to Sunnybrook in a helicopter after suffering severe head injuries in a boating accident. I didn’t expect she’d recover, but Sunnybrook’s critical care team brought her back to life. Last I heard she made a full recovery and was engaged to be married. I was awed by the professionalism and calmness of Sunnybrook’s critical care teams. You’d never know by observing them they were treating patients at death’s door.
One of the doctors who treated my father went to Harvard Medical School and later was on staff at UCSF Medical Center in San Francisco. He told me that he left UCSF to return to Canada because he wanted to practice medicine, not spend his time negotiating with insurance companies.
The discrepancy between U.S. and Canadian hospital CEO compensation makes clear there is no correlation between pay and performance regarding patient outcomes. In fact, the inverse might be true. The Lown Institute, a healthcare think tank, gave HCA a C+ ranking for patient outcomes in 2020 and a D rating for the value of its care. Despite a decline of 4.7 percent in hospital admissions and less emergency room visits, HCA in 2020 reported an increase of 10.5 percent in hospital patient revenues. Meanwhile, HCA cut staffing to what nurses said were unsafe levels.
Canadians have higher expectations of their hospital CEOs. The CEO of St. Joseph’s Health system was forced to resign after it became public that he traveled to the Dominican Republic last December despite an Ontario travel restriction advisory. The CEO of the London Health Sciences Centre was forced out after it was revealed he made multiple trips to the U.S. during the pandemic. The primary reasons given for both resignations was a loss of confidence from the hospital staffs.
Kenneth Davis, CEO of Mount Sinai Hospital in New York, kept his job after it was reported he bolted from New York at the height of the pandemic to work from his Florida waterfront mansion. Davis earned nearly $6 million in 2018. Beaumont’s John Fox kept his job after it was revealed the majority of the hospital network’s doctors had no confidence in his leadership.
Fox, who already has earned more than $20 million running Beaumont despite a dramatic decline in reputation and patient outcomes, hopes to merge his flailing network with Grand Rapids-based Spectrum Health. Based on the golden parachute awarded to the CEO of one of Beaumont’s predecessor hospitals, Fox possibly stands to earn an additional $40 million in severance – likely considerably more than what the CEOs of Canada’s University Health Network and Sunnybrook will together earn in their lifetimes.