Executive Compensation at Spectrum Health System (Michigan) (2019)

The Spectrum Health System is a tax-exempt, non-profit integrated healthcare system based in Grand Rapids, Michigan. With dozens of related and affiliated non-profit organizations that include 11 hospitals, 3 rehabilitation and nursing centers, and 120 outpatient sites, the Spectrum Health System generally refers to the whole organization. This post addresses the executive compensation reported on the IRS Form 990 (2018 for the year ending June 30, 2019) for the Spectrum Health System Group Return (SHSGR).

SHSGR is managed by a board with 181 voting members/directors/trustees, 102 of whom are independent (which appears to mean there are 79 voting members who are related to at least one other board member). 154 are listed on the Form 990, of which 100 (65%) are male while 54 (35%) are female.

Key information to know about SHSGR include the following:

• SHSGR reported total revenue of $3.5 billion (compared to $3.3 billion in 2018 and  $3.1 billion in 2017), most of which came from program services (the provision of healthcare and payment).
• Expenses totaled $3.2 billion (not including $172 million in depreciation) with the 3 largest expenses reported to be compensation ($1.683 billion), medical supplies ($478 million), and shared services/management fees ($426 million). It is unclear who shared services or management fees were paid to although it appears to be a related/affiliated organization.
• At year-end, SHSGR reported total net assets of $1.5 billion (compared to $1.4 billion at the end of the prior year).

25,651 employees received $1.683 billion in compensation which equates to an average compensation of $66,000.  1,787 employees received more than $100,000 in compensation. Then 66 most highly compensated employees were reported to be:

• $6,557,578:  Ronald Knaus*
• $4,810,913:  Richard Breon, Director, SHF (part year)*
• $2,993,236:  Christina Freese Decker *
• $2,746,475:  Steven Heacock*
• $2,593,564:  Marc Chircop
• $2,308,486:  Douglas Apple, Chief Medical Officer – Delivery System, Part-Year
• $2,273,205:  Joan A Budden *
• $1,907,462:  Seth Wolk, Former President SHMG*
• $1,718,757:  Darryl Elmouchi
• $1,687,413:  Matthew Cox, Director SHZ*
• $1,630,635:  Gwen Sandefur
• $1,410,051:  Patrick O’Hare *
• $1,358,779:  Konstantin Elisevich, VP, Dept Chief, Neurosciences
• $1,296,243:  Pamela Ries, Director SHP*
• $1,197,612:  Marcus Haw, Cardiothorac, SHH
• $1,121,319:  Peter Jebson, VP, Dept Chief, Orthopaedics, SHMG
• $1,108,810:  Charles Sherry, Section Chief – Physician, SHMG
• $  912,085:  Robert Connors, President, HDVCH, SHH
• $  827,315:  Mary Anne Jones, Director SHU & SHK
• $  822,184:  Shawn Ullreich
• $  761,891:  Brian Brasser,
• $  717,362:  Douglas Welday
• $  703,173:  Jason Joseph, Director,SHBR & SHRC*
• $  695,233:  Michael Harrison, Director, SHMG
• $  690,348:  James Forshee, Director, SHMG*
• $  686,145:  Jay Labine, Director SHCC (part year)*
• $  671,055:  William Jewel, Secretary, SHH
• $  632,330:  Melinda Johnson, Director, SHMG
• $  630,825:  Jason Slaikeu
• $  626,415:  David Krhovsky
• $  623,979:  Randall Stasik, President, SHGM (part year)
• $  618,269:  Matthew Seensma, Director, SHMG
• $  572,373:  Jordan Sall
• $  549,531:  Matthew Denenberg,
• $  537,001:  Thomas Visser, Director SHZ
• $  521,761:  Ron Lewis, President SHZ
• $  516,870:  Kenneth Fawcett, Jr
• $  513,523:  Sheryl Lewis-Blake, President SHP (part year)
• $  506,043:  Mary Kay Vandriel,President SHBR and SHRC (part year)
• $  506,007:  Robert Fitzgerald, Director SHMG
• $  498,876:  Randall Kelley
• $  473,923:  Nicole McConnell
• $  469,158:  Brett Zimmerman, Director, SHMG
• $  464,652:  Chad Tuttle
• $  456,429:  Brian Phillips
• $  455,495:  Martha Boonstra, Secretary, SHMG
• $  443,042:  Andrea Leslie
• $  435,217:  Vicki Weaver
• $  429,403:  Ovell Barbee
• $  420,695:  John Sichuan
• $  420,118:  Andrew Parsons
• $  409,601:  Gregory Gadbois*
• $  393,691:  Lee Begrow, Director, SHMG
• $  379,234:  Angela Ditmar, President, SHP
• $  372,976:  Julie Lepzinski, Former SVP, COO SHMG
• $  372,064:  Tricia Baird
• $  360,948:  Lisa Price, Director SHBR
• $  350,029:  Jane Knoer
• $  343,660:  Simin Beg, Director, SHMG
• $  317,804:  Mary O’Callaghan, Director, SHMG
• $  309,634:  Allan Nelson
• $  302,907:  Annica Waalkes, Director SHZ
• $  292,712:  Scott Davis
• $  290,480:  Patricia Hoepner, Director SHRC
• $  258,305:  Kevin Smith
• $  246,185:  Karen Pakkala

A “*” indicates compensation was paid from a related/affiliated organization.

As illustrated above, the two most highly compensated employees were Ronald Knaus and Richard Breon who received more than $42 million in compensation over the past 5 years:

Ronald Knaus:

• 2019:  $6,557,578
• 2018:  $1,564,074
• 2017:  $1,595,573
• 2016:  $1,529,544
• 2015:  $1,072394

Richard Breon

• 2019:  $4,810,913
• 2018:  $3,717,268
• 2017:  $9,468,000
• 2016:  $4,178,051
• 2015: $2,864,660

45 of the 66 (68%) most highly compensated employees are male while 21 of the 66 (32%) are female.

SPHGR paid for first class and/or charter travel. See the Form 990, Schedule J, Part III for more details.

SPHGR paid for health or social club fees or initiation fees for 11 executive employees.

SPHGR made gross up payments and/or tax indemnification.  See the Form 990, Schedule J, Part III for more details.

For information on payments to the Supplemental Non-qualified Retirement Plan, see the Form 990, Schedule J, Part III, Supplemental Information.

For “Loans to and From Interested Persons” see the Form 990, Schedule L, Part II.

For “Business Transactions Involving Interested Persons” see the Form 990, Schedule L, Part III.

To read the IRS Form 990 (2018 for the year ending June 30, 2019), click here.