Executive Compensation at Banner Health

Banner Health is a tax-exempt non-profit healthcare system that operates 30 hospitals and numerous health care clinics, nursing homes, home health care agencies, urgent care centers, and ambulatory facilities in 6 states with more than 50,000 employees.

Based in Phoenix, Arizona, Banner Health consists of dozens of related/affiliated organizations (including taxable partnerships, trusts, and corporations) but for the purpose of this post, the executive compensation of Banner Health (a 501 (c) (3)) is reported.

Banner Health has 13 members (directors) in its governing body, 11 of whom are independent. 10 of the 13 (77%) are male while 3 of the 13 (23%) are female. What is unusual (compared to other non-profit healthcare providers) is that the directors receive $65,000-$75,000 each in compensation, except for the President and CEO, Peter Fine, who received more than $11 million in compensation.

In 2019, the Form 990 for Banner Health reported the following key information:

Total revenue was $7.1 billion, of which $6.9 billion came from healthcare services.

Expenses totaled $6 billion (not including $453 million in depreciation) with the largest expenses being compensation ($3.2 billion), medical supplies ($1.4 million), fees for outside services ($632 million), and office-related expenses ($416 million).

53,832 employees received $3.2 billion in compensation, which equates to an average compensation of $60,000.  3,511 employees received more than $100,000 in compensation with the 17 most highly compensated reported to be:

• $11,256,938:  Peter S Fine, President and CEO
• $ 8,103,076:  David Bixby, Chief Legal Officer/General Counsel
• $ 3,828,820:  Rebecca Kuhn, Chief Operating Officer
• $ 2,865,385:  Dennis Laraway, Chief Financial Officer
• $ 1,908,095:  Marjorie Bessel, Chief Clinical Officer
• $ 1,786,709:  Todd S Werner, President, Arizona East
• $ 1,671,538:  Naomi Cramer, Chief HR Officer
• $ 1,635,917:  Donald S Nordlund, Chief Strategy/Growth Officer
• $ 1,479,517:  Alexandra Morehouse McReynolds, Chief Marketing Officer (to 3/19)
• $ 1,383,887:  Charles Lehn, President, BHN
• $ 1,310,501:  Francisco Arabis, Physician Exec Adv Heart Program
• $ 1,213,937:  Margo Karsten, CEO, Northern Colorado
• $ 1,037,915:  Laura Robertson, CEO, BDMC/BOMC
• $ 1,033,907:  Eric Reiman, CEO/CSO – Banner Research
• $   960,178:  Debra Flores, CEO, BTMC
• $   758,905:  Anuj Narang, CEO, BUMC-PHX (to 6/19)
• $   668,352:  Brenda Schaefer, VP, Treasury/Treasurer

The 17 most highly compensated employees received $44 million in compensation, or an average of $2.6 million. However, it is important to point out that the 8 most highly compensated employees received the largest portion – $33 million.

9 of the 17 most highly compensated employees are male while 8 are female.

The following former employees received payments in 2019:

• $354,801:  John Hensing
• $269,813:  Kathy Bollinger
• $146,022:  Ryan Smith
• $120,148:  Ronald Bunnell

BH provides several SERP (Supplemental Executive Retirement Plan):  SERP II covered 2 employees:  Peter Fine and David Bixby (the most highly compensated employees); EXEC 457B covered 395 former and current executives.  EXEC 457F covered 95 former and current executives.  To read more about these plans and long-term incentive plans provided by BH, see the Form 990, Schedule J, Part III, Supplemental Information.

Two employees received sign-on bonuses i 2019:

• $240,000:  Dennis Laraway
• $160,000:  Scott Nordland

BH paid for first class or charter travel.  See the Form 990, Schedule J, Part III, Supplemental Information for more detail.

1,426 independent contractors received more than $100,000 in compensation with the five highest reported to be:

• $89 million:  Premier Healthcare Solutions, of Chicago, IL for healthcare consullting
• $59 million:  Okland Construction, of Phoenix, AZ for construction
• $52 million:  Insight Direct USA, of Dallas, TX for IT
• $51 million:  Cerner Corp, of St Louis, MO for IT
• $35 million:  US Foodservice, Inc, of Chicago, IL