LMH president and CEO receives raise, more than $100,000 bonus

Lawrence Memorial Hospital CEO Russell Johnson is pictured on Aug. 4, 2016.

Lawrence Memorial Hospital’s top executive has received a more than $100,000 bonus that has boosted his compensation by more than 25 percent for the year.

The LMH Board of Trustees on Wednesday evening agreed to raise LMH president and CEO Russ Johnson’s base salary by 3 percent to $468,650. But the board also agreed to pay Johnson $113,295 in “variable compensation” for meeting certain performance goals and criteria that had been set in 2017.

With the bonus included, Johnson is set to receive $126,945 in increased compensation during the next year. That’s about a 28 percent increase over his previous base salary of $455,000, which had not been changed since he was hired in August 2016.

“The trustees are very appreciative of the excellent work performed by Russ,” Cindy Yulich, chair of the hospital board, said in a statement. “During the past 18 months, he has developed our visionary Destination Health strategic plan, built collaborative relationships with other community organizations, and steered the hospital through the initial stages of planning for a major expansion.”

The raise does come at a time when LMH is poised to undertake some major projects. The hospital is moving ahead with a $93 million outpatient medical building in west Lawrence. The approximately 200,000-square-foot facility would house the hospital’s OrthoKansas practice, the Lawrence Surgery Center, the LMH Breast Center and various primary care and specialty doctors’ offices. The project — with work to begin this spring and to be completed by early 2020 — is expected to be the largest in recent memory for the hospital.

Johnson also has been tasked with steering LMH through an increasingly competitive local health care market. The University of Kansas hospital system has opened its first office in Lawrence, and consolidations and mergers are happening both in the Kansas City and Topeka markets. Johnson has said LMH likely will have to be more open to partnerships and collaborations with other health care companies.

Johnson came to Lawrence in August 2016 from Centura Health Systems in Englewood, Colo., where he had served as senior vice president of network development and outreach. The suburban Denver health system is the largest in Colorado and has a long history of partnering and affiliating with hospitals. Johnson previously has said that creating partnerships, collaboration and scale are among the most important trends in the health care industry currently.

LMH trustees also have alluded to that.

“We must have a leader who can guide LMH and meet strategic goals,” Yulich said in a statement following Wednesday’s vote. “Lawrence needs a strong hospital to continue to serve our growing community’s health care needs. With Russ’ vision, leadership and experience, LMH will continue to grow as a valuable healthcare resource for this community. His expertise will help lead our organization as we face an increasingly challenging and exciting future.”

Yulich said the board settled on Johnson’s salary after consulting several hospital compensation studies and comparing Johnson’s salary with that of other leaders at similar hospitals. Johnson received the $113,295 in variable compensation, which was negotiated as part of his hiring, after meeting several performance goals, said Janice Early, vice president of marketing for the hospital. Those performance measures were related to quality and patient safety measures, patient satisfaction surveys, development of an outpatient services strategy, development of a strategic plan, and a variety of financial performance benchmarks.

LMH is a nonprofit entity, but its financial results have been strong for multiple years. The hospital’s 2018 budget expects revenues to exceed expenses by $11.6 million. The hospital is projecting revenues exceeded expenses by about $16 million in 2017, although those numbers haven’t yet been finalized. The hospital employs about 1,430 people with salary and wage expenses of about $110 million.

Trustees unanimously approved Johnson’s compensation package Wednesday, although trustees Mike Amyx and Bob Moody abstained from the vote because they felt they hadn’t been on the board long enough to fully evaluate Johnson’s performance.