LMH CEO gets large pay increase as hospital posts better financial results in 2020

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

The finances at LMH Health have improved, and now so too will the compensation package for its chief executive officer.

The board of trustees for the nonprofit hospital and health system on Wednesday approved a 30% increase in compensation for LMH Health President and CEO Russ Johnson, as the hospital posted a modest profit for 2020, but saw finances bounce back significantly from a major 2019 downturn.

The 30% jump in pay is high by historic standards at the hospital, but it comes with a caveat: Johnson took an approximately $100,000 pay cut for 2020 as the hospital was coming off one of its worst financial years in recent memory. The new compensation package gets Johnson back to his 2019 compensation level, plus adds to it by about $45,000. Johnson’s 2021 compensation package is about 7.7% higher than his 2019 package.

Hospital leaders said his leadership through unprecedented challenges related to COVID-19, plus the successful opening of the new $100 million LMH West outpatient center greatly benefited LMH.

“Russ’ leadership has been vitally important as LMH Health has navigated the COVID-19 pandemic, improved access to care for patients and provided millions of dollars in charitable care for the community,” said Bob Moody, chair of the LMH Board of Trustees. “The trustees believe Russ has made outstanding progress on the goals we set for him this year.”

As has been the case in past years, Johnson’s compensation comes in two forms. He makes a base salary, which for 2021 will be $494,776. That’s a 2.5% increase from 2020 levels. That’s the same level of increase given to all LMH employees in December.

Johnson also is eligible for a large amount of “variable compensation,” which is based upon a set of performance goals and metrics agreed to by the LMH board and Johnson. For 2021, Johnson will receive $133,228 in variable compensation. In 2020, Johnson received no variable compensation following poor financial results in 2019.

In 2019, the hospital posted a nearly $16 million operating loss as it struggled with payment levels from certain insurance providers, higher costs of labor and other expense issues.

LMH board members on Wednesday said year-end 2020 numbers showed LMH had a big bounce-back year, despite unexpected disruption to the hospital’s operations related to the pandemic.

The preliminary year-end numbers for LMH Health show the organization had revenues that exceeded expenses by $4.06 million. That happened in part because the hospital received about $15 million in federal grants and assistance related to the pandemic. Otherwise, the hospital, like most others across the country, would have taken large losses.

As it stands, the approximately $4 million of revenue over expenses is more than what the hospital had budgeted to receive. In late 2019, before the pandemic struck, LMH approved a budget for 2020 that called for revenues exceeding expenses — it would be called a profit if LMH were a for-profit institution — of about $1.5 million.

Looking further back, though, the hospitals finances are still down significantly from where they’ve been in past years. In 2017 the hospital had $14.3 million in revenue over expenses and $10.1 million in 2018.

Wednesday’s financial report to the board also included several other figures, such as:

• LMH had 31,162 emergency room visits in 2020, down from about 38,000 in 2019;

• LMH booked 24,619 total patient days in 2020, up from 24,097 in 2019;

• LMH paid $124.3 million in wages, up from $120.2 million in 2019;

• LMH spent $40.4 million in pharmaceutical expenses, up from $37.5 million in 2019.


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