Ethical Dilemmas Facing Non-Profit Hospital Ceo Compensation

Only available on StudyMode
  • Download(s) : 381
  • Published : December 2, 2012
Open Document
Text Preview
Ethical Dilemmas Facing Non-Profit
Hospital CEO Compensation

Ethical Dilemmas Facing Non-Profit
Hospital CEO Compensation
Executive Summary

This essay deals with the unethical prevalence of excessive compensation packages granted to nonprofit hospital executives. Nonprofits are highly complex organizations and are vital to the community’s in which they serves. Therefore, it is essential for these organizations to appoint highly motivated individuals knowledgeable of the healthcare industry and capable of managing and leading a hospital during a national recession while health reform is changing the culture of the US healthcare system.

However, many nonprofit organization’s tax-exempt statuses should be rescinded for allocating leftover resources to hospital executives in the form of exorbitant salaries, benefits, and other incentives. It is these hefty salaries and benefits that are restricting hospitals from carrying out their priority mission as public charities. These CEO’s exorbitant compensation packages are further straining the hospital’s ability to provide a social benefit, suggestion that these tax-exempt organizations are acting unethically, in that financial gain is taking precedents over social responsibilities.

Ethical Dilemmas Facing Non-Profit
Hospital CEO Compensation
Communities across the nation have seen the coarse effects of the delicate financial status of our country and the effects it has on healthcare organization within their community. In a time difficult for nonprofit healthcare organizations to operate at a profit, many organizations are left with no choice but to cut essential departments, programs, and employees, leaving many patients that have relied on these organizations, out in the cold. Recently, because of these financial issues, the ethical principles of nonprofits regarding CEO compensation have been under heavy scrutiny by both the public, and the Internal Revenue Service for excessive salaries and benefits.

Nonprofit hospitals are organization that are exempt from paying income, sales, and property taxes, and receive charitable donations and massive government subsidies with the understanding that these subsidies are issued in order for these hospitals to fulfill their duty as a community service and benefit.  Excessively high compensation for hospital executives is an unethical epidemic facing many organizations, particularly large and urban hospitals, that is restricting hospitals from carrying out its duties because of additional financial constraint.  Salaries for nonprofit hospital executives should be capped as they limit and often restrict hospitals to better fulfill their charitable, social missions.

Healthcare is beginning to mirror corporate businesses with many hospital CEO salaries competitively rivaling those of corporate executives. However, organizational goals and missions are nearly completely diametrical. Healthcare organizations are unlike other corporations in that corporations are in existence with the ultimate goal of financial gain. Nonprofit hospitals carry missions such as to provide high-quality, cost-effective healthcare services to all patients regardless of ability to pay, to offer training, to conduct clinical research, to serve the community as a public health advocate, and to provide support and services which respond to the area's health care needs through health education, health promotion, and access to care. Hospitals have the ethical responsibility to pursue a social mission, including providing uncompensated care and community outreach, but when their executives boast salaries with staggering seven figure salaries, the charitable work of the organization becomes obnubilated by an unmistakable pursuit of financial gain.

The IRS reported that the average hospital CEO received $490,000 in total compensation in 2006, and top executives at twenty of the larger hospitals in the nation raked in an average of...
tracking img