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Nonprofit hospitals skimp on charity while CEOs reap millions, report finds

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Re: Nonprofit hospitals skimp on charity while CEOs reap millions, report finds

#131

Post by lesuorac »

csharpminor wrote: post #96
lesuorac wrote: post #67

Earlier quoted context omitted.

> Shaming organizations into lowering exec comp probably won’t work: there’s a strong economic incentive to pay competitively. Well I think you're right on the first half but I don't think you're correct on the second half. Paying a CEO 5M vs 17M is a rounding error to a double-digit billion dollar company. Its like getting something on Amazon instead of Alibaba, sure Amazon is 3x the price but you obviously find the…

I’m not sure I understand you, I believe we’re making the same point? I mean that there’s a strong incentive to offer competitive pay (as in pay more e.g. to poach from a competing company).

Yeah, I guess you're right. The CEO has the retention/switching costs amortized in their salary unlike probably the entire rest of the company.

A company might take a 30k hit letting a 50k/yr employee walk away but they won't raise their salary to 56k to keep them from walking. But w.r.t. a CEO they will raise their salary from of 5M to 17M so that investor confidence won't tumble by them quitting.

Re: Nonprofit hospitals skimp on charity while CEOs reap millions, report finds

#132

Post by csharpminor »

coderintherye wrote: post #87
csharpminor wrote: post #59

CEO salaries should be understood in relationship to the resources that they control. For example, this CEO chose to spend $85M on travel nurses to counter the union strike happening at a hospital in their network. Presumably the CEO thinks that this gamble is worth it in forcing the union’s hand. That may be a terrible decision, but it shows the extent of resources a CEO of a $6bn organization commands. This is one…

>If you’re on the board of an organization like that, settling for a second-best CEO to save a 7-figure sum just doesn’t make sense. You're falsely associating higher pay with performance, when oftentimes they can be inversely correlated. https://www.wsj.com/public/resources/documents/CEOperformanc... https://www.gsb.stanford.edu/insights/when-ceos-are-paid-bad... https://www.epi.org/blog/ceo-pay-still-not-related-to…

I didn’t say anything about performance. What I said is that it’s untenable for a board to penny-pinch a few million dollars for someone managing orders of magnitude more in resources.

A board gains nothing from pointing to a 2005 Stanford GSB blog post if a CEO they hired runs the company into the ground.

Again, all this to say we should just tax CEOs more and let companies pay what they want.

Re: Nonprofit hospitals skimp on charity while CEOs reap millions, report finds

#133

Post by bombcar »

carlosjobim wrote: post #130
bombcar wrote: post #40

Earlier quoted context omitted.

It's quite likely that if you have two organizations - one setup as a for-profit company, one setup as a non-profit, that the government gets more taxes from the non-profit because the for-profit company can "reinvest profits" into whatever, driving the share prices up, which is (if done right) is a non-taxable event for everyone, as long as the shareholders don't sell. Whereas the non-profit that funnels excess into…

Can non-profits not reinvest income just as any other business?

They can - what (at least some) cannot do is stockpile cash at more than a certain amount (which I don't know what it is, but something like 1x yearly run-rate or something).

So buying equipment or spending it on marketing, OK.

Saving millions in the bank or investing - not OK.

Re: Nonprofit hospitals skimp on charity while CEOs reap millions, report finds

#134

Post by csharpminor »

laboratorymice wrote: post #126
csharpminor wrote: post #59

CEO salaries should be understood in relationship to the resources that they control. For example, this CEO chose to spend $85M on travel nurses to counter the union strike happening at a hospital in their network. Presumably the CEO thinks that this gamble is worth it in forcing the union’s hand. That may be a terrible decision, but it shows the extent of resources a CEO of a $6bn organization commands. This is one…

The argument that this is simply the market rate required to attract a person with the required skills can be proven false in so many ways, for example: 1. It's not a market, there is no job advertisement for the CEO role that the general population can apply for. If there were, and if it were to offer a fraction of "market", there would still be thousands of applications, and the top 1% of those candidates would abs…

I don’t agree on your first point. I do think power and talent is highly consolidated among a small number of executives. Especially when you look at (as most boards do) executives within a specific industry vertical.

That’s not to say those people guarantee success, but it is less of a risk than picking someone unknown and without the established network and direct relevant experience.

Again all this to say I don’t think shaming companies into paying less will work, we should just tax CEOs more and let companies pay what they want.

Re: Nonprofit hospitals skimp on charity while CEOs reap millions, report finds

#135

Post by csharpminor »

ceejayoz wrote: post #73
csharpminor wrote: post #59

CEO salaries should be understood in relationship to the resources that they control. For example, this CEO chose to spend $85M on travel nurses to counter the union strike happening at a hospital in their network. Presumably the CEO thinks that this gamble is worth it in forcing the union’s hand. That may be a terrible decision, but it shows the extent of resources a CEO of a $6bn organization commands. This is one…

> If you’re on the board of an organization like that, settling for a second-best CEO to save a 7-figure sum just doesn’t make sense. The idea that boards can effectively determine between first-best and second-best just doesn't make sense to me. Ranking job candidates is hard enough in much simpler circumstances.

I have no illusions that they succeed, I can just tell you that they have a strong incentive to not price discriminate.

Re: Nonprofit hospitals skimp on charity while CEOs reap millions, report finds

#136

Post by csharpminor »

hotnfresh wrote: post #72
csharpminor wrote: post #59

CEO salaries should be understood in relationship to the resources that they control. For example, this CEO chose to spend $85M on travel nurses to counter the union strike happening at a hospital in their network. Presumably the CEO thinks that this gamble is worth it in forcing the union’s hand. That may be a terrible decision, but it shows the extent of resources a CEO of a $6bn organization commands. This is one…

> CEO salaries should be understood in relationship to the resources that they control. Why? In every other case we’re told wages are set by how much it takes to get someone who can do the job to accept the position. What the company gets out of that person’s work sets a cap on potential compensation, but doesn’t set the actual amount paid.

Because understanding CEO pay as a product of organization incentives shows just how futile shaming companies into lower CEO pay is. Just tax the CEOs more and let companies pay what they want.

Re: Nonprofit hospitals skimp on charity while CEOs reap millions, report finds

#137

Post by gniv »

RHSeeger wrote: post #118
gniv wrote: post #100

Earlier quoted context omitted.

I think you are right to be suspicious. For example, back when I lived in the US and went for a checkup at a big hospital in NY: first there were greeters at the entrance of the building, then a greeter on the right floor, then a small army of receptionists, then a nurse, then a PA, then the doctor. All these are expenses. Are they necessary? Here in France there is, maybe, a receptionist that sends me to the office…

> Here in France there is, maybe, a receptionist that sends me to the office where the doctor does everything, including billing. If the doctor is making an order of magnitude more for their time than the receptionist, it's far more effective to have more receptionists for the work either of them could do.

In principle yes, but the overhead of having an extra person is big. The extra effort done by the doctor is small, especially since a lot of stuff is automated and works well (like appointments and integration with the state insurance). Yes, I was surprised too.

Re: Nonprofit hospitals skimp on charity while CEOs reap millions, report finds

#138

Post by denton-scratch »

csharpminor wrote: post #129
denton-scratch wrote: post #112

Earlier quoted context omitted.

> settling for a second-best CEO to save a 7-figure sum just doesn’t make sense. Really? You expect the CEO to make all significant decisions, all on his own? No wonder you think the CEO of a billion-dollar company needs a 7-digit salary. I think the main job of CEO is to appoint useful directors, and promote competent managers. That's certainly a challenging job; but it's a job you can learn, like any management job…

I’m engaging in good faith, no need for ad-homonyms. No, I do not expect a CEO to make those decisions on their own. They also usually bring a team (or make choices about who to keep/remove). So even if they’re not deciding directly, they’re only a step or two removed. Many of the multi-million dollar bets being placed might just be on who to hire to make a decision and execute. Incidentally, those key hires are ofte…

No "ad-homonym" (I like that version!) I didn't attack you, I critiqued your remarks (you can tell, because I cited them).

Re: Nonprofit hospitals skimp on charity while CEOs reap millions, report finds

#139

Post by s1artibartfast »

Aurornis wrote: post #60
Workaccount2 wrote: post #5

Hospitals are all non-profit so they can reap tax benefits. In order to avoid profit but still maintain growth, they shovel all their profits into network expansion. New hospitals, clinics, outpatient centers, wellness centers, all that in order to avoid lowering costs for patients. This is why it seems each locale is packed with care all from one central hospital. They have to keep growing to maintain "non-profit" s…

> In order to avoid profit but still maintain growth, they shovel all their profits into network expansion. New hospitals, clinics, outpatient centers, wellness centers, all that in order to avoid lowering costs for patients. Expanding operations reduces scarcity. More clinics reduces wait times and puts downward pressure on prices. Supply and demand. I don't even understand what you're arguing for. Do you want them…

There could be an argument that it is not expanding supply, or that competition is not putting downward pressure on price.

A simple example of this could be to hospitals engaged in a marketing battle for a fixed pool of customers.

A counter or example could be that over expansion in services leads to lower efficiency and higher prices. This could be the case when the service selector is a different party than the payer, so the pricing feedback is broken. A tragedy of the commons essentially.

Re: Nonprofit hospitals skimp on charity while CEOs reap millions, report finds

#140

Post by coderintherye »

csharpminor wrote: post #132
coderintherye wrote: post #87

Earlier quoted context omitted.

>If you’re on the board of an organization like that, settling for a second-best CEO to save a 7-figure sum just doesn’t make sense. You're falsely associating higher pay with performance, when oftentimes they can be inversely correlated. https://www.wsj.com/public/resources/documents/CEOperformanc... https://www.gsb.stanford.edu/insights/when-ceos-are-paid-bad... https://www.epi.org/blog/ceo-pay-still-not-related-to…

I didn’t say anything about performance. What I said is that it’s untenable for a board to penny-pinch a few million dollars for someone managing orders of magnitude more in resources. A board gains nothing from pointing to a 2005 Stanford GSB blog post if a CEO they hired runs the company into the ground. Again, all this to say we should just tax CEOs more and let companies pay what they want.

>second-best

Your performance comment is right there. What else is "second-best" other than a comment on performance?

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