Making the same errors as we did in the years of entitlement

Over the past few weeks salaries and fringe benefits of chief executive officers (CEOs) and senior managers of state, semi-state and voluntary agencies, including hospitals, the Central Remedial Clinic, Rehab, and Irish Water, have been analysed and criticised. Those in receipt of large salaries argue that high-calibre managers deserve to be well paid. Organisations claim they will be unable to recruit top executives unless pay packages include perks, bonuses, top-ups, expenses, and generous pensions. The subtext is "I'm worth it" and "If you pay peanuts you will get monkeys". But is there any evidence that paying people high salaries with fringe benefits buys better performance? No there is not, at least not in the health sector.

Research published in the January 2014 issue of the Journal of the American Medical Association concluded that CEO pay was not associated with patient outcomes or processes of care. CEOs from 2,681 private and non-profit acute hospitals participated in the study. Salaries had no relationship with bed occupancy rates, quality of service, mortality rates, or hospital readmission rates. Levels of CEO pay were related to the number of hospital beds and teaching versus non-teaching status. Hospitals with advanced technological capabilities and higher customer satisfaction levels paid their CEOs more.

Calculating pay based on these criteria makes no sense. Measures of customer satisfaction include whether or not a hospital provides a menu and en-suite facilities. Patient outcomes and processes of care refer to diagnosis and treatment and how well the treatment works. Or put more simply, is your health better when you leave hospital? Given a choice between customer satisfaction levels and better health outcomes, most citizens would choose outcomes every time. Mortality and readmission rates are important measures yet they do not influence CEO pay packages. While advanced hospital technology is hugely important, nothing beats the all-seeing, all-hearing, eyes and ears of experienced, well-trained health professionals. Rewarding CEOs on the basis of how technologically advanced the hospital is, and not on how the hospital recruits and, more importantly retains, and provides ongoing training for staff, seems strange.

Unfortunately, in Ireland, during the years of entitlement caused by meaningless benchmarking, CEOs and senior executives thought they should be paid more because colleagues all around them were being paid more for doing the same job. Status anxiety and power-grabbing determined pay, not service outcomes. After establishment day the HSE recruited an extra two tiers of managers leading to a ridiculous situation of managers managing other managers and a complete confusion of roles. It looks like Irish Water is doing the same. During the entitlement years citizens believed that top pay meant top people and top services. After all, I have private health insurance so it must be good, right. Wrong.

Media coverage following the closure of the private Mount Carmel Hospital shows that people still rate hospital services on the basis of how much a service costs, not outcomes. Many worried pregnant women who contacted RTÉ's Liveline, were willing to pay enormous amounts of money for a service that is available completely free in the public health system. Women are entitled to a free maternity service, regardless of income or medical card status, including free GP services before and after the birth. Furthermore, Mount Carmel Hospital had the highest caesarean section rates (39 per cent) in Ireland, more than twice the rate recommended by the World Health Organisation, proving you don't get great services just because you pay for it.

Public hospitals are better than private hospitals for a very simple reason. Medical Card holders and people from lower socio-economic groups get sick more often and when they do, they get sicker. Acute public hospitals treat huge volumes of people from these groups so health professionals in public hospitals have more experience than those in private hospitals.. In 2012 more than 1.5m patients were admitted to Irish public hospitals, including 137,522 maternity patients. Do not allow menus, grand pianos in hospital foyers, and CEO pay packages cloud your judgement.

So what criteria should be used when determining how much to pay CEOs and senior executives in state, semi-state and voluntary agencies? Whether it is health, education, services for people with disabilities, or Irish Water, top of the list must be outcomes, which are still not measured here by any hospital or agency. Irish taxpayers must learn to say, and keep saying, show me the evidence. Prove you are worth it.