Nonprofit Cape Cod Healthcare Paid Its Top Executive $3.5 Million — After He Left The Company

For Dr. Richard Salluzzo, stepping down as CEO of Cape Cod Healthcare in November 2010 was a moneymaking proposition, with Cape Cod Healthcare paying the controversial executive $3.5 million, local media reported. The case adds to a growing list of examples of what many consider excessive compensation for top executives at health insurers, hospitals and pharmaceutical companies, as rising medical costs prompt growing scrutiny nationwide of such pay. But what's unusual about Salluzzo's case is how he raked in millions in the four years after leaving the company.

Cape Cod Healthcare is a nonprofit in Cape Cod, Massachusetts, that derives much of its patient revenue from Medicare and MassHealth, the state Medicaid program. In 2013, Cape Cod Healthcare had total revenue of $724 million and a net income of more than $45 million, according to its Form 990, an annual reporting return that certain federally tax-exempt organizations must file with the IRS.

In fiscal year 2014, Salluzzo received $407,371 in compensation. In the fiscal years 2011, 2012 and 2013, he made $1.3 million, nearly $1.1 million and slightly less than $858,000, respectively. He joined the company in July 2008, CapeNews.net reported. Then, without notice, he resigned from the company Nov. 24, 2010, the Cape Cod Times reported.

William Zammer, chairman of the board of trustees for Cape Cod Healthcare, said the 2014 payment was the "last one." Salluzzo had been paid after leaving the company because during his tenure, the hospital became more profitable and saved "a fortune" in interest by achieving a better bond rating, Zammer added. The generous compensation package had been necessary because "we have a difficult time attracting people to the Cape," he said.

During his stint as CEO, Salluzzo oversaw the layoffs of about 200 Cape Cod Healthcare employees.

When he abruptly resigned, Salluzzo said he and the board "had a difference of opinion as to where the system was going." Then, a year after his resignation, Salluzzo was reprimanded by the Massachusetts Board of Registration for allegedly personally using drugs prescribed to others and for prescribing medications for his family. In one instance in 2009 while he was the head of Cape Cod Healthcare, he allegedly wrote prescriptions for Zoloft, an antidepressant, for a friend, then filled them for himself. The board fined Salluzzo $3,000.

David Schildmeier, spokesman for the Massachusetts Nurses Association called it "unconscionable we’re still paying someone who left under questionable circumstances.”

In 2014, median pay for executives was higher at healthcare companies than in any other U.S. economic sector, an analysis by the Associated Press/Equilar showed in May 2015. That year, UnitedHealth Group CEO Stephen Hemsley reportedly took home $66 million in total compensation, including salary and stock options. On average, hospital CEOs earned a salary of $386,000, a New York Times analysis found in 2014.

Meanwhile, healthcare spending is soaring in the United States, and analysts say hefty compensation packages for executives at healthcare companies is one of the reasons. In 2014, the U.S. spent $3.03 trillion on healthcare, from hospital stays to doctor visits to prescription drugs, up from $2.59 trillion in 2010, $2.02 trillion in 2005 and $1.37 trillion in 2000, the nonprofit Kaiser Family Foundation reported.