Carl Armato, chief executive and president of Novant Health Inc., received a 14.4 percent jump in salary during fiscal 2014 to $1.19 million.
The non-for-profit system, based in Winston-Salem but with a major Charlotte presence, released Friday its fiscal 2014 executive compensation figures. It has about 25,000 employees in its four-state territory, including about 5,000 in the Triad.
Armato is in his fourth year as the system’s top executive. His salary has risen 70.9 percent since he took over as the top executive Jan. 1, 2012, following the retirement of Paul Wiles.
Armato’s incentive compensation increased less than 1 percent to $919,738. Altogether, Armato’s core compensation was $2.59 million.
Novant, like most health-care systems serving North Carolina, says high compensation levels are necessary to recruit and retain executives to run “a very complex organization.”
Novant said in a statement accompanying the executive compensation chart that “executive compensation must follow very specific checks and balances.”
Novant’s board of trustees say bonuses and incentives are based on annual and three-year goals that “focus on the quality and safety of health care, improving the patient experience, transforming to an electronic health record, financial stewardship and providing community benefit.”
“Compensation must be considered ‘reasonable’ and within an acceptable range compared to similar health system and organizations ... around the country that are comparable in size, complexity and reputation.”
For fiscal 2014, Novant’s operating revenue was up 5.6 percent to $3.79 billion, and total operating expenses rose 13.5 percent to $3.62 billion.
Altogether, income from core health-care operations increased 40 percent to $166.9 million.
Jeff Lindsay, chief operating officer, received $709,856 in salary, $382,813 in bonus and incentive pay and overall core compensation of $1.23 million. Lindsay, former president of Forsyth Medical Center, was not listed among Novant’s top executives in fiscal 2013.
For the 27 listed current executives, as of Dec. 31, 2014, on Novant’s Form 990 filing with the Internal Revenue Service, the system spent $12.17 million on salaries and $8.73 million on bonuses and incentive pay.
Hospital management pay has become a hot-button issue in recent years, particularly as Forsyth and Wake Forest Baptist medical centers have cut hundreds of jobs in response to regulatory changes, as well as the economic downturn and its impact on revenue, charity care and bad debt.
Critics say hospital systems use their nonprofit status for tax advantages and public-relations purposes, while compensation committees have sought to justify corporate-level wages and benefits to top executives.
Dr. Roy Poses, a clinical associate professor of medicine at Brown University and former physician at three academic medical centers, writes a blog called “Health Care Renewal” in which he frequently tackles the issue of executive compensation.
“Each organization seems to have their own set of metrics, often frequently adjusted, and that somehow always make their own executives seem good,” Poses said.
“Every organization thinks their executives are above average,” Poses said. “There are no overseers willing to question executive pay, since boards are mainly executives of other organizations; and executives are always compared only with other executives.”