Betrayal of the Elites: When A “Non-Profit” Hospital Administrator Makes $10 Million a Year

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Swedish/Providence Hospital (Image: Wikimedia)

A reader, Don Mayer, drew my attention to a recent Seattle Times/ NY Times article on the distribution of funds to hospitals from the Cares I Act. Case in point is the Seattle-based Providence St. Joseph Health Care System. Here’s the “money line” so to speak:

“So far, the riches are flowing in large part to hospitals that had already built up deep financial reserves to help them withstand an economic storm. Smaller, poorer hospitals are receiving tiny amounts of federal aid by comparison.”

The Providence system has in its hedge fund investments and venture capital accounts, cash on hand of $12 billion. It turns a tax-free profit of $1 billion. Nevertheless, Providence received $509 million in relief funds from the federal government.

But here’s what jumped out at me. In the next to last line in this longish article we learn that Dr. Rod Hochman, CEO of the Providence System, is paid in excess of $10 million a year. That would be enough, the article notes, to cover an entire month of operations at one of America’s cash-strapped public hospitals.

A little further research turned this up: the 15 members of the Providence executive team have an average per-person annual salary of close to $3 million. This, mind you, is a health-care system that describes itself as “faith-based,” and enjoys not-for-profit status and tax exemption.

This brought to mind a discussion I had listened to recently on Econtalk.org with author Martin Gurri. Gurri is the author of the 2014 book, The Revolt of the Public. 

One of Gurri’s themes seems apt in light of CEO Hochman’s $10.5 million annual pay and the pay levels of others on the Providence executive team. It is what Gurri calls, “The betrayal of the elites.”

Gurri observes that “elite” is not an intrinsically negative word. On the contrary, it means that you are the best at something. It meant you were in some sense “admirable.” To be among the elite entailed service and sacrifice. You actually had to give some things up!

No longer. Elite status no longer connotes responsibility. It no longer carries with it the expectation of giving up something to serve in a role of leadership. Nowadays, to be elite is not a “privilege implying obligation,” said Gurri, “it is a prize.” It means you are the big winner and you get all the toys. Now, I don’t know Dr. Rod Hochman. He may be a nice guy. But it just seems to me that something is amiss when a physician, who says he works for a “faith-based, not-for-profit,” makes $10.5 million a year.

Gurri says that what being elite means in our society is that you are able to get away from other people. The elites live, says Gurri, “these fantastic, bizarre lives that make no sense to real people.” And that is good part of what drives the enormous level of public discontent, what Gurri terms, “the revolt of the public.”

While this all started before the 2008 crash, that event exposed how bad it was. The Washington Mutual Bank CEO Kerry Killinger was making something on the order of $40 million a year, while driving what had been a respected community bank (“The Friend of the Family”) to become one of the nation’s biggest mortgage machines and ultimate disaster.

In Nicholas Lehman’s Transaction Man (2019) he devotes a good deal of attention to the once venerable Morgan Stanley investment bank. By the 90s those running the show operated by a principle summed up in the acronym IBGYBG, meaning that by the time any bad consequences of our short-term profit-seeking show up, “I’ll be gone and you’ll be gone.”

Gurri argues is that our elites — in business, academia, politics, and entertainment — are at such a distance from ordinary people that they live in a strange, separate reality. The old idea that being elite entailed some kind of responsibility to live a life of service died somewhere along the way. To be elite is not to be uniquely gifted. It is to have so much wealth that you can put a huge distance between yourselves and others. This is, says Gurri, “the betrayal of the elites.”

One further note. I have often written on a theme I’ve referred to as the “decline of liberal Protestantism.” I think it relates to this. For a long time, people with wealth and privilege were reminded, in churches, that with the blessing came responsibility. “To whom much is given, of him much is expected,” to quote the Gospel of Luke.

One aspect of the decline of liberal Protestantism has been the disappearance of the elite from mainline Protestant churches. Sometimes I would meet such people who were never anything less than charming. They would say, “If I went to church, I’d go to your church.” But the social expectation to be part of a church had vanished. And so had they.

4 COMMENTS

  1. I just bought the Gurri book a couple of weeks ago after reading this intriguing article he wrote:

    https://www.mercatus.org/bridge/commentary/revolt-populism-and-reaction?fbclid=IwAR2KCanqepsSNHnql6mXlHWGJBXpk45MIq7L6HdRwVP3-20FGV49O1-3Vuw

    I’m looking forward to digging into it. I will say, though, that while I find Gurri’s landscape assessment in the article linked above insightful, he provides no answer, which is unsatisfying. The elites are hopelessly out of touch, and have lost control of the mechanisms that made them elite. The public = the mob, channeling a free floating, endless tide of irrational anger into an empty, incoherent and fundamentally destructive populism. End result? In the digital age, humanity is doomed.

    Well, okay, but what’s the way out of this trap?

    (As a side not, Gurri’s insights into the goalless nature of modern populist movements, their focus on destroying the existing order without offering anything constructive to replace what is being torn down, is why I think The Joker is a friggin’ masterpiece of a movie. It searingly conveys the essential political nihilism of our age. It captures the growing belief in a totalized systemic evil, that everything about the structures of power are rigged against the little guy, the everyman; that every politician is a self-serving, self-dealing fraud. That, say, Donald Trump and Bernie Sanders are just two sides of the same worthless coin, perpetuating a callous and rotten system even as they claim to be the agents of its destruction. That to exist in the modern world is to despair.)

  2. Thank you, All, for a provocative and well written look at a huge problem. I wish there was a solution. I feel as if we have somehow lost out center, lost our concern for others and our feeling for humanity. The haves have so much more and the have nots have less than enough and it is painful. To the looters I want to say, “This is your nephew’s school lunch money, and your grandfather’s housing assistance…what are you thinking?” Interesting though, we are lucky enough to have a few relations who make little money and are actually quite generous. Perhaps this will trickle up at a later date.

  3. I found The Joker to be far less than a masterpiece and pretty unsatisfying for the essentially same reason that you were disappointed in Gurri. It described the problem in vivid and over-the-top detail but provided no insights or answers about a way out of the trap.

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