Executive Compensation at Allina Health System (2017)

Allina Health System (AHS) is a non-profit health care provider based in Minneapolis that owns or operates 13 hospitals and more than 90 clinics through Minnesota and Wisconsin. Key information about AHS includes:

• Total revenue in 2017 was $4.3 billion, most of which came from program revenue (health services).
• Total expenses in 2017 were $4.1 billion (including $180 million in depreciation). The largest expense was compensation which totaled $2.6 billion, followed by office-related expenses at $800 million.
• AHS began the year with $2.4 billion in fund balances (net assets). After adding the excess revenue over expenses ($173 million) and unrealized gains on investments ($133 million), AHS had $2.7 billion in fund balances at year-end.

AHS is the direct controlling entity of many other non-profits but the focus of this post is limited to the executive compensation at AHS as reported to the IRS on Form 990.

In 2017, Allina Health System employed 31,790 individuals who were compensated $2.6 billion which equates to an average compensation of $81,800. 3,380 employees received more than $100,000 in compensation with the 28 most highly compensated employees listed below:

• $2,629,148:  Penny Wheeler, Director/President/CEO
• $1,457,958:  Daniel Buss, Physician
• $1,494,647:  Mark Heller, Physician
• $1,444,624:  Michael Freehill, Physician
• $1,378,559:  Leroy McCarty, Physician
• $1,319,350:  Todd Hess, Physician
• $1,242,096:  Thomas O’Connor, SVP, President United Hospital
• $1,141,814:   Christine Bent, EVP Allina Health Group
• $1,140,402:  Sara Criger, SVP, President Mercy Hospital
• $1,135,315:  Timothy Sielaff, SVP-AHG-Special Care and Research
• $1,123,658:  Ben Bache-Wiig, EVP Allina Health Group Chief Clinical Officer
• $1,100,031:  Robert Wieland, SVP, Chief Strategy Officer
• $1,006,804:  Elizabeth Truesdell Smith, Secretary/SVP General Counsel
• $  822,402:  Richard Magnuson, EVP, CFO, Treasurer
• $  684,839:  Rodney Christensen, Former SVP and President AHC
• $  647,061:  Christine Moore, SVP, Chief HR Officer
• $  623,481:  Lisa Shannon, EVP, Chief Operating Officer
• $  609,979:  Duncan Gallagher, Former Treasurer/EVP/CFO
• $  586,087:  Elizabeth Smith, Former Interim SVP AHG – Primary Care
• $  555,137:  David Slowsinske, SVP, AHG Operations
• $  511,180:  Katherine Tarvestad, SVP, Chief Compliance Officer
• $  474,631:  Margaret Hasbrouck, VP Payor Contract/Reimbursement
• $  444,498:  Corrine Koehler, VP Finance/Supply Chain
• $  416,696:  Jonathan Shoemaker, SVP, Chief Info Officer
• $  406,751:  Helen Strike, President, Unity Hospital
• $  377,043:  Mary Bear-Dukes, VP Revenue Cycle Management
• $  338,944:  Susan Heichert, SVP Chief Information Officer
• $  228,309:  Kenneth Paulus, Former Preisdent/CEO

15 of the 28 most highly compensated employees are male while 23 are female. 7 of the 10 most highly compensated employees are male while 3 are female, including the most highly compensated employee, Penny Wheeler who received more than $2.6 million in compensation.

The following employees received severance payments:

• $241,893:  Helen Strike
• $228,309:  Kenneth Paulus

The following employees received payments to a supplemental non-qualified retirement plan:

• $105,382:  Duncan Gallagher
• $102,908:  Sara Criger
• $ 83,537:  Daniel Buss
• $ 81,953:  Timothy Sielaff
• $ 79,693:  Penny Wheeler
• $ 69,949:  Michael Freehill
• $ 68,086:  Helen Strike
• $ 67,744:  Thomas O’Connor
• $ 63,472:  Leroy McCarty
• $ 60,875:  Christine Bent
• $ 59,495:  Susan Heichert
• $ 57,144:  Elizabeth Truesdell Smith
• $ 51,315:  Todd Hess
• $ 47,215:  Mark Heller
• $ 30,580:  Margaret Hasbrouck
• $ 28,497:  David Slowinske
• $ 22,899:  Corrine Kroehler
• $ 19,524:  Christine Moore
• $ 18,257:  Mary Bear Dukes
• $ 14,108:  Katherine Tarvestad

To read more about the supplemental retirement plans, see Schedule J, Part III, Supplemental Information on the Form 990.

Carol Rosenberg, a family member of Board member, Brian Rosenberg, received $157,069 in compensation for employment.

In May, 2017, Allina became aware of an employee embezzlement constituting a significant diversion of its assets. After an exhaustive investigation, Allina determined that beginning in 2004 through April, 2017, a long-term employee of the organization embezzled over $776,000 through an elaborate scheme of falsified expense reports, fraudulent mileage reimbursement claims, and inappropriate personal purchases on a company credit card. The employee was terminated and the case was referred to the law enforcement. The former employee was charged with theft and pleaded guilty. The former employee was sentenced to 45 months and to pay restitution. Allina maintained a fraud insurance policy and expects to recover most of the monetary amount.

AHS paid more than $100,000 to 202 independent contractors. The five most highly compensated independent contractors were:

• $22,806,229:  Nursefinders of San Diego, CA for temporary help
• $19,441,414:  Jedunn Construction Company of Minneapolis, MN for construction
• $18,334,026:  Metropolitan Cardiology Consultants of Coon Rapids,MN for professional medical services
• $13,046,130:  Metropolitan Cardiac Services of Coon Rapids, MN for professional medical services
• $12,679,177:  Physicians Group of New Ulm Ltd of New Ulm, MN for professional medical services

To read the IRS Form 990 (2017), click here.