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UPMC CEO Romoff raked in $6.6 million in 2012; 30 others in $1M club

| Friday, May 16, 2014, 11:15 a.m.
James Knox | Tribune-Review
UPMC CEO Jeffrey Romoff testifies before the House Insurance Committee in the Gold Room at the Allegheny County Courthouse on Thursday, Aug. 25, 2011.

UPMC CEO Jeffrey Romoff got an 8 percent raise two years ago, placing his generous compensation package near the top of the nonprofit hospital industry.

The 68-year-old Romoff, who leads the largest integrated health system in Western Pennsylvania and one of the biggest in the nation, brought in $6.6 million in 2012, up from $6.1 million in 2011, according to tax documents UPMC made public on Friday.

His total compensation, which includes salary, bonus, retirement and other pay, is more than three times larger than the median salary for a CEO at a large nonprofit teaching hospital, according to a study last year by Harvard University.

UPMC paid 30 other executives and doctors more than $1 million each in 2012, up from 21 employees who were in the $1 million club the year before.

Critics of UPMC jumped on the executive compensation figures as further evidence that the hospital system, which has 62,000 employees and is the state's largest private employer, operates more like a for-profit company than a nonprofit charity.

“How does paying its CEO $6.6 million a year, while cutting patients out of its network in the name of competition, help UPMC fulfill a charitable mission?” said Cathy Doerfler, a registered nurse at Allegheny General Hospital and a member of the Service Employees International Union, which is trying to organize service and maintenance workers at several UPMC hospitals in Oakland and Shadyside.

“I became a nurse to care for people in need, and I'm sure the great nurses and doctors at UPMC did the same. That's what health care is about, and it's why our biggest health care institutions are granted charity status.”

UPMC officials declined to comment.

Pittsburgh officials have highlighted executive compensation as one of the reasons they believe UPMC should be stripped of its nonprofit status. A lawsuit filed last year by former Mayor Luke Ravenstahl, which continues under Mayor Bill Peduto, challenged UPMC's property and payroll tax exemptions, and said the system does not meet the criteria as a purely public charity under state law.

Peduto spokesman Tim McNulty declined to comment.

The federal government requires tax-exempt organizations such as UPMC to file public tax returns. The filings disclosed on Friday cover the financial year that ran from July 1, 2012, to June 30, 2013. Compensation figures for top-paid employees are for the 2012 calendar year.

In the past, UPMC officials have justified Romoff's pay by citing the size and complexity of the health system he runs. It owns 21 hospitals, employs 3,500 doctors and has an insurance division with more than 2.3 million members.

UPMC is ranked in the top 10 by U.S. News & World Report as one the nation's best hospitals.

It is financially successful. In fiscal year 2013, UPMC earned $140 million from operations on total revenue of $10.2 billion. Its net income that year was $359 million.

Romoff has been leading UPMC through a turbulent fight with Highmark Inc., the state's largest health insurer, since 2011 that will culminate at the end of this year when most UPMC facilities and doctors become out-of-network for Highmark insurance subscribers. And Romoff is leading UPMC through the implementation of federal health reform under the Affordable Care Act, the single biggest change to the medical industry in decades.

The CEOs of large urban teaching hospitals such as UPMC had a median salary of $1.7 million in 2009, according to the Harvard study. The median pay of all nonprofit hospital CEOs was less than $600,000 that year.

Romoff was ranked as the third-highest paid CEO among the nation's largest nonprofit hospital systems in 2011, according to Kaiser Health News. His compensation was more than twice that of the CEOs of Mayo Clinic and Cleveland Clinic — hospital systems in U.S. News & World Report's top 10 list.

By comparison, Highmark Inc., the state's largest health insurer and the owner of Pittsburgh's second-largest health system, paid CEO William Winkenwerder $4.3 million in 2013, his first full year on the job. The insurer paid nine other executives more than $1 million each.

West Penn Allegheny Health System, which Highmark bought last year and made the core of its Allegheny Health Network, paid former CEO Christopher Olivia $1.9 million in 2012, including $1.25 million in severance, according to tax documents released on Thursday. Olivia resigned in 2011. The system paid one other executive and seven doctors $1 million or more in 2012.

Alex Nixon is a staff writer for Trib Total Media. He can be reached at 412-320-7928 or anixon@tribweb.com.

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