Sonoma Valley Hospital’s board of directors granted CEO Kelly Mather a $32,000 raise last week after concluding she’s doing a good job and should be paid accordingly.
The unanimous vote to raise her yearly salary to $330,000, with a $25,000 bonus, was made during Thursday night’s board meeting following an evaluation of Mather’s performance in which board members, executive staff and other hospital employees gave her high marks.
“We’re a business,” began Peter Hohorst, treasurer of the five-member board and one of two appointed last month to a “CEO Evaluation Committee.” With that in mind, he said, “The things that we accomplished last year, we wound up with very, very high quality, patient satisfaction and patient ratings that were extraordinary.”
Hohorst said Mather accomplished this despite a number of challenges, including the fact that Medicare “changed their criteria for reimbursing hospitals for acute care. And they siphoned $2 million a year out of us.”
And yet, he said, “She managed to get through our operating costs and take $2 million out.”
In part this was done through layoffs, with seven hospital employees let go over the past year. “You’ve got to take a hard nose in what you can do for cost,” Hohorst said. “But that doesn’t mean that people shouldn’t get a raise.”
Others at the hospital are getting raises as well - some at the executive level, some not - even as hospital staff is asked to do more with less. Hohorst said that failing to pay at least median-level wages results in talent walking out the door.
“If you fall behind in terms of compensation for the staff at the hospital … get cheap on raises, essentially, it’s more expensive, because you become the training facility for all the other hospitals in the area.”
“I would not be surprised if other hospitals at least inquired if she is available,” he added.
Mather acknowledged that she was tapped by other hospitals, but she also said, “I’ve never followed the money, that’s not my thing. But I expect to be paid at the midpoint, just like my staff is paid at the midpoint.”
Up till now, during her four and half years running the hospital, “I was always paid below the market.,” Mather said. “So they took me to the market midpoint, which is what we try to do with all of our staff in Sonoma.”
Asked whether she would have left without the raise, Mather spoke carefully: “I think I was planning on being here for up to five years with my commitment. And I’m at four and a half now. So I think there was some concern that I might start to look for new opportunities.”
“And yes,” she added, “the salaries are higher at other places, but I like it here.”
The raise takes effect July 1 of this year. Mather said it is not tied to a contract, which she expects the hospital will renegotiate sometime this fall.
“The hospital’s viability is my job,” she said in explaining the recent need for layoffs. “Every year we have so much coming in and so much we can spend. … We have to make adjustments for the future. But my philosophy is, all my staff at Sonoma Hospital get paid at midpoint, including me.”
Exactly what constitutes midpoint, or median, can be a moving target. Payers & Providers, a healthcare industry publication, examined the 2010 compensations of 36 California hospital district CEOs and concluded that the median salary at that time was $230,990, while the mean, or average, was $338,972.
The difference in those numbers was due to a small number of outliers who were paid substantially more, the publication said.
One of them was Marin General Hospital CEO Lee Domanico, who Payers & Providers said made just over $1 million that year. (Mather put Domanico’s current salary at something closer to $800,000 a year.)
“However,” Payers & Providers wrote, “district hospital compensation on average is almost half of what it is for standalone hospital CEOs.”
Meanwhile, Mather said, general surgeons make around $400,000 a year, while orthopedic surgeon can expect to make $550,000 a year. One of Mather’s recent accomplishments was to convince contracted physicians with Sonoma Valley Hospital, such as anesthesiologists, to accept a cut in pay.
That was “a huge commitment on their side,” said Hohorst, who also pointed to Mather’s fundraising skills as another good trait the hospital should pay for.
“We felt (the raise) was deserved, and it wasn’t fair to penalize Kelly for the fact that the Affordable Care Act is making life difficult for her,” he said.
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