The following commentary was provided by Bruce Krider, Chairman of the Board of the Palomar Pomerado Health District in response to PublicCEO’s coverage of “Another Millionaire Public Employee.” In addition, a large number of responses spurred, “Reader Mailbag: The $1 Million Public Employee.”

Covert’s salary was based on the AVERAGE for hospital CEOs running hospitals that generate the same level of revenue. So it was a market-based salary determination.

If you have someone who is performing superbly, you better pay him/her at least average for what he/she can easily get anywhere else.

Secondly, be clear that only about 4% of the hospital system revenue comes from taxes. 96% comes from the successful operation of the facilities. That is hardly a typical public agency where it is totally tax supported. Be clear about the difference.  The tax revenue we get barely covers the bad debts from providing emergency care to illegal immigrants, something we are obligated to do.

PPH generated close to $30 million net to the bottomline in the past year. If you take a look around most hospitals are barely surviving. Indeed, many district hospitals are failing or closing.

PPH has an AA rating from Fitch’s rating agencies. That was in part to Covert’s ability to posture the organization financially and share the vision of the organization and its recent accomplishments. Palomar has garnered more national awards in the past five years than most  hospitals ever get.  To top it off PPH is building the Hospital of the Future, a $1 billion project which is the largest in the U.S.  Indeed PPH is the largest hospital district in the state of California.

PPH is one of only 19 hospitals in California that has been designated a Magnet hospital.  It was the first hospital SYSTEM in the United States to achieve this distinction.

It was selected to advise the Joint Commission on how to revise their accreditation process with another 25 hospitals chosen from across the country.

Finally, hospital CEOs are recruited from a field of candidates who all compete for hospitals, private and “public”. So whether your hospital receives 4% of its revenue from tax payers or whether it is a private hospital, you compete for the same best leadership. Covert came from the well known Washington Hospital Center in Washington DC, a well known and recognized healthcare facility.

That is not to say that there won’t always be people out there looking to spend modest amounts in the name of attracting lesser experienced, qualified and capable leadership. But we decided not to go for mediocre in our leadership. We sought excellence and we got it.

As a result, we have an outstanding CEO who, with the help of a great staff, achieved a paradigm shift in the overall level of healthcare.

The new PPH Hospital of the Future mentioned above is already recognized nationally for its design and internationally for its Information Technology Systems(partnered with by Cisco). This new “Hospital of the Future” would not have come to pass by putting someone in the chair with less than outstanding experience and capabilities.  Sometimes it pays to invest in superordinate skills.

Bruce Krider
Chairman of the Board
Palomar Pomerado Health District