This New England

"The cemeteries are full of 'indispensable men.'''

--- Charles DeGaulle

And so the winner-take-all psychosis in American business grinds on for about the 30th year, including at "nonprofits.'' (Where the profits are taken out by the senior execs and subsidized by the taxpayers.) This goes on as living standards for most Americans continue to fall.

Consider Lifespan CEO George Vecchione's intriguing $2.96 million-a-year compensation to run Lifespan, the Providence-based hospital chain, as detailed in a fine story in The Providence Phoenix this past week.

The soft-spoken former accountant Mr. Vecchione is the highest paid hospital mogul in New England. I'm sure he's a fine manager.

He made considerably more than the runner-up in New England, reports the Phoenix-- James Mongan, CEO of Boston-based "nonprofit'' Partners HealthCare, which is much bigger and more "prestigious'' than Lifespan. (Partners is in a sleeping bag with Harvard, which my friend Alex Beam, of The Boston Globe, likes to call World's Greatest University, or just WGU.)

Mr. Mongan's pay and benefits package totaled a paltry $2.02 million --- still, not bad, when the average family income is about $50,000 a year in America. (To the left is not someone in the Rhode Island Hospital Emergency Room or even someone Valiumed-up to enter an MRI, but part of the reconstruction of the Tomb of King Midas at the Museum of Anatolian Civilizations, in Ankara.)

Meanwhile, the pay and benefits of another Rhode Island "nonprofit''-hospital-chain mogul, John Hynes, was $1.4 million last year to run Care New England, reports The Phoenix, from the public records.

And the other senior execs do okay, too.

How many nurses or doctors don't get hired; how many people don't get treated; how many double work shifts, etc., must there be to pay for these Wall Street-style compensations, which often get even bigger when they arrange for themselves gigantic golden parachutes in mergers whose only beneficiaries are often the senior executives arranging them?

Who knows?

Of course, the boards of such "nonprofit'' companies trot out the argument that you have to pay such vast sums (even by what are supposed to be charitable organizations -- thus subsidized by the taxpayers) because only that will lure competent people, who of course do nothing except for ever-larger sums of money, unrelated to the general economy. And of course all these folks are of world-historical genius.

We heard that argument about the Wall Street and Detroit executives who helped drive their companies and the U.S. economy into the ground. But indeed it has often seemed that the higher-paid the execs the worse they are because of compensation deals that favor short-term-profit-goosing and other creative accounting to solid long-term building of shareholder value. Take the money and run.

The boards, who mostly consist of pals of the CEO's, also conveniently forget that many people getting paid much, much less, such as the president of the United States, government agency heads, admirals, generals and the heads of some large nonprofits, run far, far larger and more complex organizations than the likes of Mr. Vecchione. Some of them do their jobs far better than people paid 15 times more.

No, the problem is that about 30 years ago there began the tradition of board members, who themselves were rich, pumping up the pay of CEOs on the endlessly repeated idea that someone was indispensable because they were stars and stars because they were indispensable -- in a kind of circular reasoning.

Also, since board members are usually rich, they are made uncomfortable by the CEO not being rich, too. Bad for club morale! Embarrassing! Everyone in this room must be rich, or made rich so we can look them in the eye! The plutocrats club, and at "nonprofits,'' with the patina of civic-minded prestige -- which usually ain't at all bad for other, more directly for-profit business-related interests.

It's part of the celebritization of American life, including the corporate division. Citibank's Walter Wriston and Chrysler honcho Lee Iacocca were frontrunners in this early mythologization of the alleged corporate genius.

The boards, many of whose members are directly chosen by the CEO, operate in a mutually beneficial relationship with their CEO's of pumping up each other's perks.

Then there's the argument that the execs are always on call, 24/7, so they should be paid hundreds of times what the little people are paid. Poor lambkins.

But lots of people are on call 24/7, such as doctors, politicians and many, many others. And they don't all have underlings to help them.

Somehow, I think the hospital chains can find people just as good (or better) who will run the hospital chains for maybe an insulting $350,000 a year, supplemented of course by Food Stamps so they can afford their yacht club memberships.

But in the end, it's up to the boards and their consciences. Of course, the public, which is paying for all this Gilded Age stuff, might want to express an opinion or two to the directors.

Especially after a 10-hour wait in the understaffed emergency room -- understaffed in part to make sure the rich people running the show get ever richer. Nothing is ever enough...But then, such practices, when accepted nationally, always end in a great crash.

XXX

In other world news, Mexico City will hand out free Viagra to older men to improve their morale and the general happiness of the metropolis in these challenging times.

 Tags  Alex Beam Care New England George Vecchione James Mongan John Hynes Lifespan Partners HealthCare WGU

Comments

Saul Ricklin said:

It is time for stock holders to stop endorsing board recommendations for election of board members who vote for these outlandish executive pay packages but I do not know who elects hospital board menbers.

Link | February 14, 2009 7:14 PM
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an "insider" said:

Here's the answer (no surprise!). Hospital board members are NOT elected. They are appointed by their fellow board members, thereby perpetuating the exclusivity of the club.

Link | February 16, 2009 12:06 AM
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kimberly said:

...hmmm. I'm a "little person" doing things right, paying for a 30-year fixed, working several jobs, raising a child to understand empathy, love and a complicated world. This out-of-balance world leaves me feeling powerless. I'm sort of brilliant, too, but I have not yet made my mulit-million dollar connection; maybe I never will. My clear conscience of a life-well-lived is not much consolation when I'm working so hard to get by, and watching "my money" go places it should not. What do we do?

Link | February 16, 2009 8:53 AM
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Papa said:

Maybe Lifespan should apply for money under TARP, and that way the exhorbitant salary could fall under the $500K rule

But I forgot, Lifespan is non profit....

Link | February 18, 2009 3:21 PM
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