Catholic World Report
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Special Report
April 29, 2011
CEO Lloyd Dean receives an enormous compensation package for watching the bottom line while ignoring Church teaching.

From the earliest days of his presidency, Barack Obama has never missed an opportunity to decry the high salaries and bonuses awarded to those he often calls “the fat cats” on Wall Street. Never once in these denunciations, however, has he mentioned the enormous compensation packages given to the senior executives leading non-profit health care organizations. This is a strange oversight, considering the fact that some of the highest-paid executives in the country work in the non-profit health care sector. Many of those executives work in Catholic health care.

The Wall Street Journal has noted the multi-million-dollar pay packages awarded the leaders of these non-profit health care organizations. In a 2008 series on “the transformation of nonprofit hospitals into profit machines,” the Wall Street Journal introduced its readers to many of these well-compensated health care leaders—many of whom receive pay packages that top those in publicly traded companies.

There are several chief executives of health care companies who receive astronomical salaries, but the biggest winner in the compensation contest is Lloyd Dean, the president and chief executive offi cer of Catholic Healthcare West (CHW), an organization of 40 Catholic hospitals and clinics throughout California, Nevada, and Arizona.

In 2009, Lloyd Dean was awarded more than nine million dollars in salary and benefits. In 2009, according to IRS documents, Dean was awarded $1,232,933 in base compensation, $2,129,779 in bonus and incentive compensation, $5,414,294 in a category entitled “other compensation,” $1,142,998 in deferred compensation, and $40,842 in non-taxable benefits, for a total pay package of $9,960,856.

Given President Obama’s stated concerns about out-of-control spending in the health care sector, it is difficult to understand why he does not view Dean and his colleagues as “fat cats” also. During his presidential campaign, Candidate Obama claimed that doctors were pursuing unnecessary procedures like elective tonsillectomies in order to maximize their income. Even as he implies that the reason for soaring health care costs is the greed of practitioners, insurance companies, and pharmaceutical companies, President Obama continues to ignore the salaries of health care administrators like Dean.

AN OBAMA SUPPORTER

It is possible that President Obama was reluctant to target Dean and his nine-million-dollar salary because Dean has been one of his loyal supporters? An eager contributor to the Obama for President campaign coffers in 2007, Dean gave $2,300 to the Obama for America campaign. Dean also donated $10,000 to the Democratic Senatorial Campaign Committ ee.

Dean was also on the front lines in the health care reform battle. The CEO of Catholic Healthcare West stood against the Catholic bishops and aligned himself with Sr. Carol Keehan of the Catholic Health Association, who defi ed the bishops in her push for the health care reform legislation.

Dean is so closely associated with President Obama and the Democratic Party that there was even some speculation that Dean would be appointed to the president’s cabinet in 2008. The Washington Post (and the website Daily Kos) reported that “according to Democratic sources in and around the White House,” Lloyd Dean was a candidate for Health and Human Services secretary or director of the White House Office of Health Reform.

Lloyd Dean’s name may be familiar to many Catholics these days, because he has been at the center of a scandal involving an abortion that took place in 2009 at St. Joseph’s Hospital, one of Catholic Healthcare West’s hospitals in Phoenix, Arizona. Following the abortion, Bishop Thomas Olmsted of the Diocese of Phoenix demanded that hospital officials acknowledge in writing that the abortion was a violation of Catholic directives for health care institutions. But it appears that hospital officials—including Lloyd Dean— refused to meet his conditions. As a result, in December 2010 Bishop Olmsted officially revoked the Catholic status of St. Joseph’s Hospital, declaring that the hospital may no longer refer to itself as “Catholic.”

Dean refused to acknowledge the scandal of an abortion being performed at a Catholic hospital, and he sent a letter to Bishop Olmsted, stating that “this is a complex matter on which the best minds disagree.” Claiming that the abortion at St. Joseph’s was necessary to treat the mother’s underlying medical issues, Dean cited the opinion of Marquette Professor M. Therese Lysaught on the permissibility of the St. Joseph’s abortion. By preferring the conclusion of the professor to the Phoenix bishop, Dean revealed that he regards Olmsted’s defense of Catholic teaching to be just one more “opinion” on a “complex matter.”

This scandal was not the first time in recent memory Lloyd Dean found himself disagreeing with an American bishop. Dean also joined Sr. Carol Keehan in defying the bishops over the presence of public funding for abortion within the health care reform bill. President Obama was so grateful for Sr. Keehan’s help in shepherding the bill that he gave her one of the 20 pens used in the signing ceremony at the White House.

Perhaps Lloyd Dean should have received a pen too, for he had worked just as hard to pass the bill. Creating videos, purchasing advertising, and lobbying members of Congress, Dean’s organization advanced Obamacare aggressively. On the Catholic Healthcare West website, Dean asserted, “We took our first official position in support of universal access in 1992, and in 2002, we established four principles for reform: universal access, stable financing, and improved quality and accountability.” Many Catholics were discouraged to find that respect for life from conception to natural death was not included in Dean’s four principles for reform..

NOT IN COMPLIANCE

The public scandal resulting from the 2009 abortion at St. Joseph’s in Phoenix was not the only issue that concerned Bishop Olmsted. At a press conference in December, Bishop Olmsted listed other Catholic Healthcare West facility violations of the Ethical and Religious Directives for Catholic Health Care Services to which all Catholic hospitals in the country are required to adhere.

Bishop Olmsted declared, “Catholic Healthcare West has been responsible for a litany of practices in direct conflict with Catholic teaching. These include: contraceptive counseling, provision of various forms of contraception, voluntary sterilization, and abortions due to the mental or physical health of the mother or when the pregnancy is the result of rape or incest.”

The “tipping point” for Bishop Olmsted was St. Joseph’s Hospital’s involvement with the Mercy Care Plan— an organization that provides health care through Arizona’s Medicaid program. By virtue of its involvement in the plan, the hospital has been “formally cooperating with a number of medical procedures” against Catholic teaching, he said. In his decree revoking the Catholic name from St. Joseph’s, Bishop Olmsted wrote: “The reason for this decision is based upon the fact that, as bishop of Phoenix, I cannot verify that this health care organization will provide health care consistent with authentic Catholic moral teaching as interpreted by me in exercising my legitimate episcopal authority to interpret the moral law.”

In a statement that accompanied the decree, Bishop Olmsted wrote: “Authentic Catholic care in the institutions of CHW in the Diocese of Phoenix has been a topic of discussion between CHW and me from the time of our initial meeting nearly seven years ago. At that first meeting, I learned that CHW already did not comply with the ethical teachings of the Church at Chandler Regional Hospital…I objected strongly to CHW’s lack of compliance with these directives and told CHW leaders that this constituted cooperation in evil that must be corrected.”

It is clear that Lloyd Dean refused to take Bishop Olmsted’s concerns seriously. Bishop Olmsted lamented that “subsequent communications with CHW have only eroded my confidence about their commitment to the Church’s Ethical and Religious Directives for health care. They have not addressed in an adequate manner the scandal caused by the abortion.”

Despite Dean’s reluctance to comply with Catholic health care directives for several years now, the board of Catholic Healthcare West, on which seven nuns sit, has been very happy with his attention to the bottom line, so much so that it has awarded him progressively higher salaries each year. In 2006, Dean made more than $5.3 million, which included the forgiveness of a $782,541 housing loan from his employer. With bonuses tied to profits, Dean has become an immensely wealthy man. According to CHW, Dean’s compensation package “reflects his skill in turning the hospital system around financially.”

A few years ago, the Chronicle of Philanthropy named Dean the second highest paid non-profit executive in the United States. It is likely that he will move up to the top spot as comparisons are adjusted to reflect his 2009 windfall. And Dean is not the only highlypaid executive at CHW, as each of the 12 members of Dean’s executive team also made more than a million dollars. Some made much more: Michael Erne, Dean’s chief operating officer at CHW, made $4,753,268 in 2009, and Ernest Urquhart, Dean’s human resources chief, made more than $1.6 million dollars in 2009.

On one level, it is difficult to understand how Dean and his team could have been so well rewarded by the CHW board when it appears that they have been so seriously remiss in adhering to Catholic teaching. Despite Dean’s success in creating the “profit machine” that is CHW, he has been spectacularly unsuccessful in maintaining the Catholic identity of the organization. On another level, this state of affairs isn’t surprising at all. The CEO of Catholic Healthcare West, after all, isn’t even a Catholic.

 
About the Author
Anne Hendershott 

Anne Hendershott is professor of sociology and Director of the Veritas Center for Ethics in Public Life at Franciscan University of Steubenville, She is the co-author of Renewal: How a New Generation of Priests and Bishops are Revitalizing the Church (Encounter Books).
 

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