Study reveals widening wage gap between nonprofit hospital CEOs and staff.
A new analysis shows that the pay gap between nonprofit hospital CEOs and their employees has widened over the past decade. Researchers reviewed data from more than 1,400 nonprofit hospitals and found that executives have seen far greater pay increases than the average worker during this period. The study, published in Health Affairs, highlights a growing imbalance within organizations that receive tax benefits for their nonprofit status.
The research team, based at the University of Chicago, Brown University, and Rand Corp., took a look at IRS filings and Medicare cost reports to track compensation trends from 2009 through 2023. In 2009, nonprofit hospital CEOs earned about 10 times the average wage of their employees. By 2023, that figure had risen to 12 times, a difference representing a 17.6 percent increase. Average CEO pay went from roughly $814,000 in 2009 to more than $1 million in 2023 after adjusting for inflation. During the same period, wages for all hospital employees, including executives, increased by only about 9.8 percent.
The report also points to a larger shift in the way nonprofit health systems operate. Researchers noted what they called a “financialization” trend, where nonprofit hospitals adopt practices common in publicly traded companies, focusing heavily on financial performance and executive incentives. They caution that as this approach becomes more prevalent, nonprofit hospitals may become a significant driver of wage inequality in the healthcare sector. This has raised questions about whether current compensation practices align with the community-oriented missions that justify tax exemptions for these organizations.
The study also explored whether the COVID-19 pandemic had an impact on executive pay gaps. Results showed that during the first year of the pandemic, the gap actually narrowed slightly—by about 7.5 percent—as hospitals raised wages to retain frontline staff. However, this change was short-lived. In the following years, CEO compensation continued to grow faster than average employee wages, expanding the gap once again.
These findings are likely to add fuel to ongoing debates about hospital accountability, especially given the financial challenges many facilities report. Nonprofit hospitals receive tax breaks intended to support their role in providing community benefits, such as charity care and health programs. Critics argue that widening pay disparities call this role into question, especially in areas where hospitals are often among the largest employers. Some advocacy groups have already called for caps on executive pay or for greater transparency in how these salaries are set.
The discussion is not limited to wages alone. Analysts say executive compensation reflects broader decisions about resource allocation, particularly at a time when many hospitals face staffing shortages and rising costs. Hospitals often justify high pay for CEOs as necessary to attract experienced leaders, especially in a competitive healthcare market. But for staff members facing wage stagnation and increased workloads, these explanations offer little comfort. The growing gap could affect morale and retention, issues that already strain many facilities.
While the study does not prescribe specific policy solutions, the authors suggest that wage inequality measures should be part of conversations about how nonprofit hospitals contribute to their local economies. State and federal lawmakers could consider these findings when shaping regulations tied to tax benefits and reporting requirements. Some states have already floated proposals to limit compensation for top hospital executives, though such measures face strong opposition from healthcare leaders.
The widening gap between nonprofit hospital executives and their staff underscores the complex dynamics of a system under pressure. As hospitals balance financial performance, workforce stability, and community responsibilities, how they address this pay divide may shape public trust and policy responses in the years ahead.
Sources:
Nonprofit hospital CEO, employee pay gap widens: Study
Pay Gap Between Nonprofit Hospital CEOs And Employees Grew, 2009–23
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