Executive Compensation at Commonspirit Health

Commonspirit Health was created in 2019 when Catholic Health Initiatives (CHI) and Dignity Health merged to become the largest tax-exempt, non-profit healthcare system in the United States. With more than 150,000 employees staffing 1,000 care centers and 137 hospitals in 21 states, Commonspirit Health, the healthcare system, is comprised of hundreds of non-profits. This post only addresses the executive compensation at Commonspirit Health (CH), the non-profit, 501 (c) (3) that oversees the entire CH healthcare system.

Based in Chicago, CH has 14 members (trustees) in its governing body, 12 of whom are independent. The Form 990 lists 18 trustees (which appears to be due to timing differences) of which 10 (56%) are male while 8 (44%) are female.

CH reported total revenue of $2.5 billion in 2019, most of which came from “assessments” from related/affiliated organizations that all contributed to the parent organization for overall management.

Expenses totaled $3.1 billion (including $143 million in depreciation) which indicates the organization posted a loss of $600 million combined with a negative $500 million change in net assets (capital contributions, write-offs, and equity changes) to put CH in a negative $6 billion net asset position at year-end. Note: CH has $5 billion in assets (primarily loans and notes receivable, securities and cash, and other assets) and $11 billion in liabilities (primarily tax-exempt bonds, unsecured notes payable, and secured notes payable).

The $3.1 billion in expenses consisted primarily of 5 major category expenses:

• $818 million: Fees for Outside Services (no detail provided beyond mgmnt, general, consulting)
• $665 million: Group Benefits
• $640 million: Office, Insurance, Repairs
• $348 million: Compensation
• $332 million: Interest

3,387 employees received $348 million in compensation, which equates to an average compensation of $103,000. However, only 878 employees received more than $100,000 in compensation with the 25 most highly compensated reported to be:

• $4,005,092: Kevin Lofton, CEO
• $2,589,438: Dean Swindle, Pres, Enter Bus Lines and CFO/Treas (through 2/7/19)
• $2,444,927: Ketul Patel, SVP, Divisional Ops, CEO, CHI Franciscan Health
• $2,310,197: Larry Schumacher, SVP of Operations
• $2,257,728: Cliff Robertson, SVP, Divisional Ops, CEO, CHI Health
• $1,522,931: Frederick Meaders, Cardio Surg (most comp paid from a related org)
• $1,501,979: Douglas Lawson, SVP, Divisional Ops, CEO, CHI St Luke’s Health
• $1,431,162: Frank Bauer, Cardio Surg SE Reg (most comp paid from a related org)
• $1,429,287: Jeffrey Drop, SVP and Division Executive Officer
• $1,409,859: Mitch Melfi, Chief Legal Officer, Secretary
• $1,406,494: Patricia Webb, Chief Administrative Officer
• $1,397,807: Robert Weil, SVP and Chief Medical Officer (through 6/30/19)
• $1,365,398: Paul Edgett III, Chief Business Lines Officer
• $1,355,490: Michael Rowan, Former Res of Health System Delivery/COO
• $1,328,545: Ruth Williams Brinkley, Former SVP/MBO Pres and CEO
• $1,264,906: Kathleen Sanford, Chief Nursing Officer
• $1,262,579: Thomas Kopfensteiner, Chief Mission Officer
• $1,113,351: Nichlas Barto, SVP, Capital Finance
• $ 839,504: Philip Foster, SVP, Enterprise Risk Management and Chief Risk Officer
• $ 801,829: Denis Zerr, SVP, Info Tech Svc /Co-Int IT Leader (through 4/12/19)
• $ 688,267: Joyce Ross, SVP, Communications, Asst Secretary (through 3/31/19)
• $ 640,766: Michael O’Rourke, Former SVP and CIO
• $ 602,400: Stephen Moore, Former SVP/Chief Med Officer (paid from a related org)
• $ 569,206: John Dicola, Former EVP, Enterprise Strategic Development
• $ 565,164: Thomas Clifford Deveny, Former SVP, Phys Serv and Clinic Integration

The 25 most highly compensated employees received $36 million in compensation in 2019. 21 of the 25 (84%) most highly compensated employees are male while 4 (16%) are female. The 10 most highly compensated employees are male.

CH paid for first class or charter travel and companion travel. In addition CH made gross up payments and tax indemnifications. For specific information on these perks and the deferred compensation plan, see the Form 990, Schedule J, Part III, Supplemental Information.

137 independent contractors received more than $100,000 in compensation in 2019. The 5 most highly compensated were reported to be:

• $586 million: Conifer Health Solutions, of Frisco, TX for revenue cycle services
• $ 87 million: Deloitte Consulting, of New York, NY for consulting services
• $ 74 million: Performance Interiors, of Pittsburgh, PA for food services
• $ 56 million: Cerner Corp, of Kansas City, MO for technology services
• $ 42 million: McKinsey and Co, of Denver, CO for management and consulting services

It is important to note that CH paid $87 million to Deloitte Consulting and $42 million to McKinsey and Co. Why does CH play consultants $129 million when they pay 18 executives more than $1 million each (including the CEO who was compensated $4 million)?