After controversy arose around Valley Children’s CEO Todd Suntrapak’s high rate of pay, the hospital responded by saying the $5 million-plus in compensation reported to the IRS for 2020 and 2021 was due to a change in accounting.

As expected, the pay for Suntrapak and other Valley Children’s executives dropped in the latest filings.

However, the 2022 hospital’s tax records show that the nonprofit’s executive pay still far exceeds other C-Suite compensation.

Valley Children’s board decision to increase Suntrapak’s pay was not isolated. A new study reports that hospital CEO pay increased by 30% from 2012 to 2019.

Suntrapak’s base pay growth beats that average, increasing 39% in two years, according to IRS Form 990s. It took average CEO pay nationwide seven years to grow less than that.

And, while health care executives virtually everywhere are receiving more compensation, the expenditures that allow hospitals to file as nonprofits and thus not pay taxes — charity care and community benefits — have remained stagnant.

Nurse pay has also grown far slower than executive pay, according to the study.

“Executive compensation grew substantially for all CEOs of nonprofit hospitals and healthcare systems from 2012 to 2019,” a research article from Rice University’s Baker Institute for Public Policy concluded.

“Higher profits were the next most important determinant of higher CEO pay, while changes in charity care and their association with CEO compensation were negligible. Rising executive compensation is contributing to the affordability crisis in American healthcare and should remain in the forefront of the minds of policy makers,” the study went on to state.

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What Did Valley Children’s Pay Suntrapak and C-Suite in 2022?

Valley Children’s had no official comment on the change of reported executive pay. But both Suntrapak and Vintage Foster, a former contracted spokesperson for the hospital, said the $5 million pay in 2020 and 2021 was because of a change in the timing of reporting bonuses.

Suntrapak has only done one interview regarding his pay and that was with ABC30. In it, he said he was proud of the work that merited the increase.

“I’m really proud of this the work that they’ve done,” Suntrapak said. “And I’m proud of the work of the work that I’ve done as the CEO and the leader, and I don’t choose what my compensation is.”

Valley Children’s created a compensation committee to determine that rate. While Suntrapak sits on two hospital boards, the hospital’s chief communications officer, Zara Arboleda, said he is never present for those discussions.

With base pay, bonuses, and other benefits, Suntrapak’s pay in 2022 came out to $3.05 million. The year before: $5.17 million.

Suntrapak’s base pay continued to be $1.6 million in 2022. Bonus compensation dropped to $1.06 million in 2022 from $1.6 million.

Michele Waldron, the hospital’s senior vice president and CFO, made $150,223 more in base pay in 2022 than the year before. Total pay, however, came out $1.5 million less, dropping to $1.35 million in 2022.

Lynne Ashbeck, Clovis mayor and the hospital’s chief community impact officer, made $716,251, down from $842,447 in 2021.

Total reported executive pay dropped to $17 million from nearly $25 million.

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But even at the lower reported rate, Valley Children’s executive pay remained higher than either St. Jude Research Hospital and Rady Children’s Hospital, both of which hold more in assets than the Valley Children’s.

With more than $2.6 billion in assets — compared to Valley Childrens’ $1.8 billion — Rady Children’s in San Diego paid $14 million to executives. Its CEO, Patrick Frias made $1.8 million in total pay.

With more than $10 billion in assets, St. Jude paid $13.5 million to executives in 2022. Its CEO, James Downing, made $1.8 million.

CEO Pay Nationally Grows 30%. RN Pay? 2.3%

Across 1,113 nonprofit and independent hospitals in 2012 and 868 hospitals in 2019, average CEO pay grew 30%, researchers at Rice University found. The average of $996,000 earned in 2012 grew to $1.3 million in 2019 — both figures in 2019 dollar value.

The biggest hospitals handed out the biggest raises. Pay increased by 42.5% to an average of $5.62 million in 2019.

For reference, in 2019, Valley Children’s paid Suntrapak $2.1 million. The next year, his reported pay jumped to $5.5 million, just below that of the largest hospital networks.

While average CEO pay grew 30% in seven years, Suntrapak’s base pay — not including bonuses — grew 39.6% in two years, going from $1.2 million in 2019 to just under $1.7 million in 2021. Suntrapak also notably received a $5 million forgivable loan he used to buy a home in Carmel.

Meanwhile, the study found registered nurse pay nationally only grew 2.3% from 2012 to 2019, going from $75,762 to $77,460.

“Not only is CEO compensation growing, but it is growing disproportionately relative to other healthcare workers; the wage gap between CEOs and mean salary of a registered nurse grew from 23:1 in 2005 to 44:1 in 2015,” the study stated.

Suntrapak told ABC 30 that a $4-per-hour raise to all employees put nurse pay on par with “anybody else in the area.”

However, a nurse who asked to remain anonymous because of concerns about backlash from the administration, said the increase only came after news stories emerged about Suntrapak’s compensation.

No Link Between CEO Pay and Patient Outcomes

Other studies show no connection between higher CEO pay and better patient outcomes, according to Rice’s research.

In fact, in a 2017 survey, 69% of hospital CEOs said the hospital’s financial performance was how pay incentives were determined. Only 18% said serving the community — including efforts to improve the health of the nearby population — was a factor.

In previous interviews, the hospital has cited Valley Children’s strong financial performance in defense of executive pay. The former spokesperson Foster said it was the intention of the hospital board’s executive compensation committee to put pay among the 90th percentile of hospital CEOs, helping with competitiveness and retention.

Suntrapak’s $5 million real estate loan is only forgivable if he stays in the position for a contracted period of time, according to Arboleda, the hospital’s chief communications officer.

Valley Children’s Ups the Insurance it Holds on Execs

One line of executive benefits that did increase was the amount of life insurance Valley Children’s holds on its executives.

Split-dollar life insurance is used as a retention tool for executives that can pay off for hospitals. Hospitals take out life insurance policies on certain executives and will sometimes split paying the premiums with the recipient.

Valley Children’s chose to pay the entire premium. If an executive dies, the benefit is paid to the hospital. If an executive leaves, the cash value of the policy can help attract a replacement, according to the 990 filing.

In return, executives can often borrow against the policy at lucrative rates.

In 2022, the hospital had $53.4 million in life insurance on eight executives — with two plans on William Chaltraw, Jr. That year, the hospital plans for COO Danielle Barry, Chief People Officer Kelly Beall, and Chief Nursing Officer Vicky Tilton. The year before, the hospital had $33.2 million in policies.

When the 2022 Form 990 was filed — in September 2023 — the hospital estimated the investment’s value to be worth $78.9 million.

The premium on the plan depends on age and health. The premium for a $1 million similar policy recently quoted by an expert contacted by GV Wire ranged from $18,000 to $55,000. Policies for executives ranged from $4.6 million for Tilton to $11.1 million for Suntrapak.

Since 2015, 20% of Valley Children’s Charity Care Has Gone to Its Own Organizations

Comparing charity care at Valley Children’s to St. Jude may not be a fair comparison.

Community benefits at the Memphis, Tennessee-based hospital regularly average over half of the national organization’s expenses. Of the $114 million in financial assistance for medical procedures it provided, it only received $1.8 million in offsetting revenue.

Going back to 2015, charity care at Valley Children’s has averaged 8.4% of expenses, according to Form 990s from that time. At Rady’s in San Diego, charity care has averaged 7.18%.

In the past two years, Valley Children’s charity care as a portion of expenses has been near or below its own average. In 2022, 8.61% was spent on community health or patient bills. In 2021, only 2.02%. Before that, the hospital spent 14% and 10% in 2020 and 2019, respectively.

Both hospitals average well over some of the worst offenders, according to the Rice University study. The study noted two Pennsylvania hospitals that lost their nonprofit status after consistently spending less than 1% of expenses on community benefits.

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A closer look, however, shows a significant portion of Valley Children’s community benefits going to its own organizations. Since 2015, the hospital has donated $79.4 million to two of its affiliated  groups —Valley Children’s Medical Group and Valley Children’s Healthcare.

Of the $466 million the hospital provided from 2015 to 2022, 20.6% went to the two groups. After 2019, donations there significantly declined, from $10.2 million in 2018 to $804,393 in 2019. 2021 was the only year donations to the medical group broke $1 million — $3.9 million.

In comparison, the $38 million Rady’s gave to its own organizations since 2015 made up 6.02% of its charity care.

Hospital Debts Sent to Collections: Arias

The biggest share of community benefits for nonprofits typically goes to covering medical procedures for uninsured and under-insured patients. In California, most children have insurance, and so paying for care has largely fallen to the state.

Nonetheless, insurance doesn’t cover all bills. At Rady’s, financial assistance not offset by other revenue averaged .22% of expenses. At Valley Children’s, financial assistance averaged .03% of expenses. Rady’s financial assistance consistently reached at least a tenth of a percent. At Valley Children’s, in eight years of filings, it has never eclipsed a tenth of a percent.

Arboleda said the hospital sells some of its uncovered medical debt to collections agencies — as does Rady’s. In 2020, a class action lawsuit was brought against CMRE Financial Services, Inc. for debt sold to the collection agency by Rady’s.

When Fresno City Councilmember Miguel Arias’ son broke his arm in September 2023, he took him to Valley Children’s. Despite being doubly covered, insurance didn’t cover everything, Arias told GV Wire.

He says he did not know about two charges not being covered, one for $24 and one for $249. He was told after 90 days that the debt was sold to a collections agency — this time, CMRE. By the time he got the call from CMRE, the $276 worth of unpaid had grown to $908 after interest.

He says constituents have told him about bills also sent to collections.

Nationally, the rate of charity care has only grown significantly at the nation’s biggest hospitals.

The Rice study concludes that increases in compensation for nonprofit hospital CEOs, regardless of performance, matches reports from sources of the widening gap between executive pay and worker compensation.

“The increase in CEO compensation associated with leading larger healthcare systems and earning greater profits may explain the massive increase in healthcare system consolidation which has occurred over the last several years,” the report stated.