Chief executive of LMH to receive slight bump in salary in 2019
photo by: John Young
The chief executive officer of Lawrence Memorial Hospital will see his salary hold basically steady in 2019.
Board members of LMH Health on Wednesday approved a compensation package of $582,812 for CEO Russ Johnson. That was up less than $1,000 from the $581,945 that he was paid in 2018.
Board members said they were pleased with Johnson’s performance. The relatively small increase comes from the unique structure of Johnson’s contract. Seventy percent of Johnson’s compensation comes in the form of a guaranteed base salary. The remaining 30 percent comes in the form of “variable compensation” that is tied to certain metrics related to patient care, financial performance of the nonprofit hospital and other such factors.
Board members on Wednesday agreed to boost Johnson’s base salary by 3 percent, which is the same cost-of-living increase that other LMH employees will receive in 2019. But after hospital officials computed the various metrics they measure, Johnson ended up receiving less in variable salary than he did last year. The board approved $100,103 in variable compensation for 2019, compared with $113,295 last year.
Board President Rob Chestnut, though, said Johnson continued to perform very well in a number of key areas.
“The trustees believe Russ has made outstanding progress on the performance goals we set with him last year,” Chestnut said in a statement. “He has demonstrated continued implementation of milestones in the Destination Health strategic plan, advanced a broader community health strategy around mental health services, successfully developed orthopedics as a service line, and steered the organization through the planning of a major expansion, to name some of the goals he has achieved.”
LMH has undertaken one of the largest expansions in its history. Work is underway on an approximately $100 million outpatient medical center in northwest Lawrence. The project, which is next to Rock Chalk Park, will house an orthopedic center, an outpatient surgery center, a breast center, a retail pharmacy, and a host of doctors offices and other services.
The board did not provide a detailed explanation of what factors led to the reduction in variable compensation Johnson received. However, the hospital did face some budget challenges in 2018. While the nonprofit hospital continued to have revenues well exceed expenses, the amount of net income — or what would be called profit for a for-profit company — did come in short of budgeted expectations. Net income was about $1.9 million, or about 13 percent, under budget for the year, according to preliminary numbers provided to the board.
In addition to the various internal metrics, Chestnut said the board also used compensation studies to confirm that Johnson’s salary was comparable to his peers in the health care industry.
“It takes a strong leader to guide the strategy LMH Health needs to succeed in an increasingly challenging future,” Chestnut said in a statement. “With Russ’s vision, leadership and experience, LMH Health will continue to grow as a valuable resource for this community.”
Johnson came to Lawrence in August 2016 from Centura Health in Englewood, Colo, where he served as senior vice president of network development and outreach.
Board members unanimously approved Johnson’s compensation package, with trustee Mike Amyx absent from the Wednesday meeting.