Summary: In recent years, the media have scrutinized the high salaries--some approaching $1 million annually--paid to health care executives, in some cases linking them to the rising cost of health care. Yet little has been known about how representative such salaries are of the industry as a whole or about the various factors that influence chief executives' compensation. A GAO survey of more than 400 hospitals found that the average annual compensation of hospital chief executives in 1991 was $131,000--ranging from about $31,000 to $850,000--but that their actual compensation was understated by what they earned for their services to related businesses, such as medical equipment companies, pharmacies, diagnostic centers, and property management firms. Differences in compensation earned by hospital chief executives were due largely to varying hospital characteristics, inpatient data, financial performance, and location. For instance, executives employed by large for-profit hospitals in the Northeast were likely to receive the highest pay.
