NUMC reviewing $13M physician pay plan amid financial troubles

At Nassau University Medical Center, the county's financially struggling public hospital system, dozens of physicians in a long-running compensation plan earned more than six figures in additional pay last year.

Some of the highest paid from the plan were top administrators at NuHealth, the public benefit corporation that runs NUMC. Their extra compensation exceeded $200,000 in six cases, according to hospital records obtained by Newsday.

Dr. Daniel Chikvashvili, NuHealth’s director of nuclear cardiology, had a base salary of $175,844 in 2022 and earned more than $264,000 from the plan, the most of any physicians in the program. His total earnings for the year were $440,275, payroll records show.

Dr. Anthony Boutin, chief executive and president of NuHealth, earned $580,000 in base salary last year and $245,000 in extra compensation. His total pay was more than $824,000.

They were among more than 160 physicians who boosted their earnings through the program known as the Faculty Practice Plan, according to records obtained through a state Freedom of Information Law request.

The plans are not uncommon at hospitals, and advocates argue they help recruit and retain talent. But at NUMC, which has struggled with multimillion-dollar deficits in recent years, officials are giving the decades-old program a second look as part of the system's overall review of its finances.

Its Faculty Practice Plan generated $13.6 million in additional pay for physicians in 2022 and $12.9 million in 2021. 

Sixty-two physicians earned more than $100,000 from it in 2022, records show, and six physicians earned more than $200,000. Those who benefited include chairs and vice chairs of various hospital departments, including cardiology, gastroenterology, radiology and psychiatry.

In response to Newsday inquiries, NuHealth officials said in a statement they are reviewing the compensation plan.

“While it is not unusual for those arrangements to exist even in public hospitals, this plan will also be part of the review and reform processes now underway. NUMC must pay competitively in order to attract talent but that must be done responsibly,” according to the statement. “Arrangements that are outside the bounds of normal practice, like those that have been discovered to exist here, are representative of long-standing fiscal mismanagement issues that are being addressed by the administration.”

Critics say the arrangement raises questions over whether NuHealth can continue to function as a stand-alone hospital system with operating deficits of over $100 million a year and some of the highest salaries in state and local government. 

“The salaries are some of the largest expenses of the hospital, and they don’t have sufficient revenue to support that level of expense of operations,” said Adam Barsky, chairman of the Nassau Interim Finance Authority, a state control board that oversees county and hospital finances. “I don’t think there is a one-time quick fix here. They have to consider a variety of strategic alternatives, including perhaps joining a larger system, and being able to calibrate their business model to those areas where there are sufficient revenues to support the operation."

NIFA has projected NuHealth will run out of cash by year's end, and voted Sept. 21 to rehire Alvarez & Marsal, a Manhattan consulting firm, to review the system's finances. NuHealth officials say the projections are incorrect and they are making changes that will increase revenue. 

Faculty Practice Plans

Faculty Practice Plans aim to incentivize doctors to treat patients and boost revenue for hospital systems. Physician pay can vary based on their specialty or geographic location. 

Dawn Skeete-Walker, a spokeswoman for SUNY Buffalo, said earnings under the medical college's Faculty Practice Plan can be "unlimited." Employees are compensated in direct relation to the revenue they generate, she said. 

NuHealth has had a Faculty Practice Plan for more than 30 years. Approved by the Nassau County Board of Supervisors in 1986 and adopted by the system in 1990, the plan "recognizes that to ensure its success, there should be an opportunity for all physicians to supplement their base salaries," according to its mission statement.

The revenue stems from what doctors bill patients and insurers. The chairs of each department divvy up the funds to doctors in their units, based on their performance.

NuHealth officials did not identify any specific issues with their Faculty Practice Plan, and declined to make administrators available for an interview.

NuHealth defended Boutin’s compensation package but declined to provide details about his private practice work. 

“As a practicing physician at NHCC and under the plan currently implemented, Dr. Boutin is permitted to participate," according to NuHealth's statement. "The FPP will ultimately be part of the new fiscal strategy, and those recommendations and changes will be rolled out in the coming months.”

Boutin and Chikvashvili declined requests for comment.

Compensation under the system's Faculty Practice Plan is up from 2021, when physicians earned a total of $12.9 million, and 2020, when the total was $12.6 million, payroll records and budget documents show.

The plan doesn't exist at Erie County Medical Center, one of the other two public benefit corporations that run hospitals in New York State, a spokesman said. The other, Westchester Medical Center, has given physicians bonuses in the past for meeting performance metrics. A spokesman declined to say whether it operated a Faculty Practice Plan.

Without one, physician pay would be too low to attract high-quality doctors to work at NuHealth, advocates say.

“Many of them are here seven days a week, day and night. They’re accessible by phone. It’s way different from a private hospital,” said Nina Gavan, president of the NUMC chapter of the Civil Service Employees Assocation, Local 830.

“I absolutely think they earn their keep here and have a lot of responsibilities that keep them up at night,” she said. “I know I can get these people in the middle of the night if something goes wrong.”

But Martine Hackett, chairwoman of Hofstra University’s Department of Population Health, said the high salaries are not sustainable for stand-alone hospitals.

Hackett said health care "has changed dramatically in the past 50 years," as hospitals consolidate and patients visit outpatient facilities more frequently.

“I think the fact that they need to be able to supplement the physician’s salaries in this way really highlights that the county has no business in supporting hospitals,” Hackett said.

NUMC receives most of its funding from state and federal government. Nassau County no longer provides a direct subsidy, but it backs $115 million in hospital system debt and would be on the hook for the unpaid debt if NuHealth were to shut down.

NuHealth had operating losses of $135.6 million in 2021 and $102.3 million in 2020. The system owes more than $250 million to New York State for unpaid health insurance premium bills and is responsible for paying more than $881 million in health care premiums to future retirees.

“The fact that the salaries are what they are — in line with what their peers are getting — but you have to be able to [keep this up] for a hospital running on a deficit, just indicates that this is the wrong business for the county to be in," Hackett said.

Salary growth

Salaries overall at NuHealth account for about half of the system’s operating expenses.

Newsday reviewed the salaries of more than 500,000 employees participating in the New York State and Local Retirement System, the largest in the state, and found that of the 100 highest-paid employees in that system, 36 worked for NuHealth and earn more than $400,000 annually.

A total of 1,050 NuHealth employees earned more than $100,000 in pay last year, NuHealth records show. Eighty-five of the system's 4,000 full- and part-time employees made more than $300,000.

The salaries have grown and will continue to grow, budget documents show.

The corporation paid a total of $248 million for salaries in 2013. In 2022, the hospital exceeded its $307 million budget for salaries, spending $315 million.

In 2023, the hospital budgeted $322 million for salaries. By 2026, the figure is expected to reach $357 million. The hospital's most recent union contract expires at the end of this year, and union officials are pressing for higher wages for more than 4,000 employees.

“You can’t have an organization that runs with expenses greater than revenue, year after year and expect it to stay in business,” said Thad Calabrese, a professor at NYU's Robert F. Wagner Graduate School of Public Service.

NuHealth said Matthew Bruderman, appointed as chairman last year, has tried to correct years of financial mismanagement.

"When the chairman took office, there were no current audited financials, no daily cash flow reports, poor budgeting practices and an ineffective collections process that left tens of millions in revenue on the table," according to NuHealth officials' statement. 

"Previous hospital leadership had also spent millions on new executive offices with views of Manhattan," the statement said. "Now, efforts to reform these processes [are] already yielding significant results including monthly increases in revenue."

By Scott Eidler

scott.eidler@newsday.com@ScottEidler

Scott Eidler is a deputy editor for the towns department at Newsday. Scott has worked at Newsday since 2012 and previously covered municipal government and education.