Valley Children’s board used a national scale to pay its CEO. That’s extreme | Opinion

Like many Bee readers, I was stunned to learn that Valley Children’s Hospital CEO Todd Suntrapak made over $5 million in one year.

Actually, over two consecutive years. Suntrapak earned $5.5 million in 2021, then $5.17 million in 2022.

It was spelled out in tax forms called 990s, which nonprofits like Valley Children’s are required to file every year.

Seeing the raw numbers on a black-and-white form, however, does not yield context. Thankfully, Bee staff writer Tim Sheehan provided some interesting comparison data in a recent story.

For example, Fresno’s Community Medical Centers — which operates the downtown hospital, the Clovis Community Medical Center and the Fresno Heart and Surgical Hospital — has nearly three times as many beds as Valley Children’s, and generated twice the revenues in the 2022 tax year. Yet Community’s CEO Craig Castro made less than half of what Suntrapak earned in total compensation.

Sheehan also reported that an organization called Candid, which gathers information on more than 1.9 million nonprofits in America, did a 2023 compensation survey of nonprofit specialty hospitals, the category Valley Children’s fits in. The average compensation for CEOs “was just under $1.2 million, with only 10% earning more than $2.3 million,” Sheehan found.

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It is not just Suntrapak. As Sheehan notes, on “its 2022 tax form Valley Children’s listed a roster of key executives including 22 with titles of senior vice president or vice president. Collectively, those executives were paid more than $20.1 million in compensation.”

Valley Children’s is top heavy with vice presidents and senior vice presidents, said Vikas Saini, a physician and president of the Massachusetts-based Lown Institute, which studies executive compensation among nonprofit hospitals.

Sheehan did some number-crunching on total compensation paid to executives by nonprofits in the central San Joaquin Valley for 2022, and found that Valley Children’s had three of its leaders in the top 10. Suntrapak led the list by far.

Board’s defense

Suntrapak’s pay for one of the years was boosted by extra money for meeting performance goals. He did not set his own salary — the hospital board did. Michael Hanson, former Fresno Unified superintendent who is now on the VCH board and its foundation board, said in a statement that “Our decisions are guided by industry standards and aimed at attracting and retaining top talent necessary to uphold our commitment to excellence in health care.”

To be sure, Valley Children’s has received a slew of honors for high-quality medical service to children.

When Hanson refers to “industry standards,” what does he mean?

In a response to KSEE-TV reporter Dom McAndrew, a spokesman representing the hospital, Vintage Foster, said the board used an independent consultant to help determine Suntrapak’s compensation. Foster explained that the board “directed the consultant to build a compensation model that put Todd in the 90th percentile nationwide.”

The key words are “national” and “nationwide.” In other words, Suntrapak’s compensation was based on a national scale. He was to be placed in the top 10% for earnings.

That contradicts what the National Council of Nonprofits advises boards to do as a best practice.

In its guidance on executive compensation, the council says this: “The independent body should take a look at ‘comparable’ salary and benefits data, such as that available from salary and benefit surveys, to learn what nonprofit employers with similar missions, and of a similar budget size, that are located in the same or a similar geographic region, pay their senior leaders.”

Key words jump out: Similar size, similar budget, same or similar region.

In other words, base the compensation off what others in the state or even region, i.e. San Joaquin Valley, get paid.

The hospital board will argue no good comparisons can be made regionally because there is no other children’s hospital in the Valley, and that would be true.

But even on a state and national level, Suntrapak was compensated more than CEOs at bigger medical centers. As reported by Bee staff writer Erik Galicia, “Suntrapak earned more money in the fiscal year ending Sept. 30, 2022, than the CEOs of two larger hospitals ... Rady Children’s Hospital in San Diego and Children’s Hospital Los Angeles, according to those hospitals’ public tax filings for same fiscal year.

“That year, Suntrapak also earned more than James Downing, CEO of St. Jude Hospital, which is known for its national fundraising campaigns through television commercials featuring children with cancer diagnoses.”

Controversy hurts

Last Friday, a 10-year-old from Sanger named Maximus Cantu got to ring the bell at Valley Children’s to signify he completed chemotherapy treatments and was cancer free.

That joyous day for him, as reported by Fox 26 TV, was the result of lifesaving care he received at the hospital.

That mission, of helping children through life-threatening illnesses, is the heart of what Valley Children’s does every day. Unfortunately, it has been overshadowed lately by the compensation controversy.

The hospital board can put this to rest by following the advice of the National Council: “The board of directors is responsible for hiring and establishing compensation (salary and benefits) for the executive director/CEO that is ‘reasonable and not excessive,’ but is also enough to attract and retain the best possible talent to lead the organization.”

Balancing those factors is what the board must do. Compensating Suntrapak at the top 10% of children’s hospital CEOs nationally is failing that duty.