Wake Forest Baptist Medical Center paid a combined $3.35 million in total compensation to its former and current chief executives in 2017, the health-care system reported Wednesday.
Dr. John McConnell moved from the chief executive’s position to become the executive director of Wake Forest Healthcare Ventures on May 1, 2017. He had been chief executive for nearly nine years.
McConnell’s total compensation for 2017 was $2.15 million, down 6.5% from fiscal 2016, according to the IRS Form 990 filing.
Meanwhile, the 2017 compensation of $1.2 million for Dr. Julie Ann Freischlag reflects from when she took over as chief executive on May 1, 2017. Freischlag became permanent dean of the medical school in February 2018 after serving as interim deal for seven months.
Although the IRS tax returns for N.C. Baptist Hospital and Wake Forest University Health Sciences are for fiscal 2017-18 — which ended June 30, 2018 — Wake Forest Baptist reported executive compensation for calendar year 2017.
That means executive compensation disclosures are more than 17 months old when released by the organization. Freischlag’s first full year of compensation as chief executive and medical school dean will not be reported until May 15, 2020.
Wake Forest Baptist said Wednesday that it has more than 19,200 employees systemwide since completing its acquisition of High Point Regional Health System on Sept. 5, 2018. The medical center is the largest employer in Forsyth County, with 12,873 employees, according to the Forsyth County Board of Commissioners’ 2018-19 budget.
The medical center said the combined $16.91 million cost of 2017 executive compensation listed for 23 named current and former executives represents again “less than 1 of the institution’s total expenses.”
The center repeated previous justifications for the compensation of McConnell, Freischlag and other top executives by saying that academic medical centers “are very complex organizations that require a special set of skills and experience to manage relationships with physicians and researchers, the university, its patients and community.”
Handling that complexity “while navigating often conflicting expectations of patients, insurers, regulators, medical staff and businesses ... takes proven talents possessed by a small group of health care executives,” the medical center said.
“Compensating executives, as we do all of our employees, competitively and appropriately, is crucial to the success of Wake Forest Baptist and to northwest North Carolina.”
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.
McConnell’s salary was $1.03 million, along with $267,085 in bonus and incentive pay, $566,952 in was what listed as “other reportable” compensation, $269,643 in unvested retirement and other deferred compensation and $19,534 in other benefits.
The other reportable compensation includes a $546,312 supplemental executive retirement plan payment, $18,000 in 457(b) retirement contributions and $2,640 for life and disability insurance premiums.
In January 2012, the medical center’s board of directors approved the supplemental executive retirement plan as part of “implementing of a new executive compensation policy creating consistency across” all of its executives.
For Freischlag, her salary of $796,930 for the eight months of 2017 put her in the 35th percentile for chief executives in peer academic medical centers.
Freischlag received a hiring bonus of $100,000 and incentive pay of $90,000. She also received $190,699 in unvested retirement and other deferred compensation, $17,995 in other benefits, $3,795 in compensation for life and disability insurance premiums, and $1,690 in taxable moving expenses.
Dr. Kevin High served as the executive vice president of health system affairs during 2017. He was promoted to president of Wake Forest Baptist Health in February 2018. High was paid $586,688 in salary, plus he received incentive and bonus pay of $144,524 and total compensation of $922,637.
For fiscal 2017-18, which ended June 30, 2018, Wake Forest Baptist reported a 50.4% decline in excess revenue to $70.2 million. In a not-for-profit organization, “excess revenue” is analogous to “profit” in a for-profit organization.
Wake Forest Baptist’s core revenue rose 7.5% to $2.47 billion. Operating revenue and support was up 7% to $2.86 billion. Operating expenses climbed 9.6% to $2.84 billion.
It had $36.8 million from net investment gains. Not-for-profit hospitals depend on investment income to increase their bottom lines and to help pay for capital investments.
Other top earners
As has been the case in recent years, some top executive earners for 2017 included those promoted into new positions at Wake Forest Baptist, those who retired or left employment, and those who announced similar retirement or departure plans in 2017 or 2018.
For example, former Chief Financial Officer Chad Eckes was third in total compensation at $1.02 million, including $346,612 in salary and $640,420 in severance pay.
Wake Forest Baptist said when Eckes left the center on June 11, 2017, that his departure was voluntary to “pursue other opportunities.” Wednesday’s statement listed Eckes as being terminated.
Another example is Dr. Eric Tomlinson, who served as chief innovation officer and president of Wake Forest Innovation Quarter until March 1, 2018. He served as a consultant for an additional four months.
Tomlinson received a 2% increase in salary to $412,764, a 32.9% increase in incentive and bonus pay to $174,074, but a 19.8% decrease in total compensation to $730,314.