A paper at the National Bureau of Economic Research examines non-profit hospital governance, and in particular whether having the Chief Executive of the hospital on the Board of the facility has an impact on pay and on quality measures. Theoretically the Board of Directors of a for-profit or non-profit hospital is responsible for exercising independent oversight of the performance of the hospital and ensuring that pay of management is reasonable. In the case of a non-profit, the hospital should be striving to provide good service at the lowest possible price. In practice, most non-profit hospitals make immense amounts of money and charge as high or higher prices than for-profit hospitals do. (NBER Paper)
As you might expect, when the CEO is on the Board, his or her pay is much higher. But in these cases, hospital prices are also higher as are profit margins. These Boards are generally filled with people who make large donations or who are noted in the community. They all make lots of money and when the CEO is sitting there with them, they are more than happy to forget their fiduciary and community duty and give him or her massively excessive compensation packages, and the CEO in turn creates and overpays layers of management and supports it all but building monopolies in local markets and charging excessive prices. If you want to know the number one problem in keeping health care costs in the US under control, this is it.
The Healthy Skeptic is a website about the health care system, and is written by Kevin Roche, who has many years of experience working in the health industry. Mr. Roche is available to assist health care companies through consulting arrangements through Roche Consulting, LLC and may be reached at 
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It’s funny how we in the public think Boards are independent and have the shareholders’ interests at heart. I kinda thought like this but always wondered why CEOs could underperform and keep their jobs. Then a CFO at a former employer mentioned in a conversation that Boards of Directors see the company through the CEOs eyes. And it makes sense – I was at a small public company and could see how the CEO limited information from senior employees, including members of the CEO’s own executive staff – all officers of the company. The prior CEO had mostly former colleagues and friends on the board and they were not going to hold his feet to the fire, even after buying a company for $120 million then, within a year, writing off $100 million of the purchase price. Oh, and that was an all-cash deal. You’d expect a CEO that promoted that deal to be fired for that, but nope. And this was for public companies with shareholders. Now think about a private hospital – there are no shareholders to hold the hospital and CEO accountable. No corporate raider to amass shares for a proxy fight. No short sellers to exert pressure. It’s completely a good ‘ol boys club. And then there’s another thing common with boards and e-staff: they make the rules. At this same company I had a good relationship with the VP of Sales. While in his office I saw that he had recently received a significant stock option grant. I asked him about it. He was fine with my question. He said that the company had missed milestones in the last fiscal year and the e-staff didn’t get their cash bonuses so this extra option grant was to make up for their reduced income. Needless to say the employees didn’t get this makeup grant. I’m not against officers and directors getting paid well when performance warrants it, but I loathe the fact that they control the piggy bank and can always find a way to enrich themselves, whether they perform or not. That’s life in corporate America…