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Home Publications Blogs Beat the Press Taxpayer Subsidy to Former Hospital CEO Is Equal to 16,800 Months of Food Stamps

Taxpayer Subsidy to Former Hospital CEO Is Equal to 16,800 Months of Food Stamps

Wednesday, 16 July 2014 04:00

We all know how hard it is to get by on a $5 million a year salary in New York City. Therefore readers should not feel bad about subsidizing the $5.6 million paycheck for Herbert Pardes, the former CEO of New York-Presbyterian Hospital and now the executive vice-chairman of its board of trustees. 

The NYT had an interesting piece on Dr. Pardes salary as well as the pay of other top executives at large hospitals. However the piece erred in presenting the issue of these large paychecks as a question of social justice versus market outcomes. As a top executive of a tax exempt institution, Dr. Pardes is being subsidized by taxpayers. If we assume that most of the money that he is soliciting for the hospital is coming from people in the top tax bracket, then taxpayers are paying roughly 40 percent of the money that Dr. Pardes is able to collect. If taxpayers were not providing this subsidy it is likely that he would be raising considerably less money for the hospital, which would make his market value considerably lower.

There is an argument that the public may want to subsidize the provision of health care by New York-Presbyterian Hospital. It is not clear what the argument would be that school teachers and firefighters should be subsidizing the paycheck of a hospital executive earning more than $5 million (16,800 months worth of food stamp benefits) a year. 

Comments (5)Add Comment
written by Dennis, July 16, 2014 5:04
Awesome - but rather than comparing yearly salary subsidies with monthly benefits, could the relationship be presented even more tersely with a smaller (and therefore more illustrative) number along the lines of "Taxpayer Subsidy to Former Hospital CEO could also sustain Food Stamp Benefits for 1400 People" (16800/12=1400)?
Social Justice? Vile is Not a Strong Enough Word For It
written by Last Mover, July 16, 2014 5:40

The link above is titled "The Rise of the Non-Working Rich" by Robert Reich. Included is the observation that only 6 WalMart heirs have as much wealth as 42% of Americans, up from 30% in 2007.

Where is the political party in America that will call this out for what it is? Herbert Pardes has a market value driven heavily by the power of government to tax or not - in this case to avoid the tax.

Who does Herbert Pardes think he is anyway, an energy company? A military contractor? A Wall Street banker?

Let's hear it for social justice, shall we America? Get out there and fight to the political death over taxes, taxes, taxes in the name of social justice.

Join the anti-tax, anti-government party. Join the pro-tax pro-government party. Join any party you want. It doesn't make any difference anymore. Next year those WalMart heirs along with Herbert Pardes will be better off as the 99% continue the slide into economic serfdom.

But at least you will have social justice won't you America. Somewhere, somehow there is a New York Presbyterian Hospital out there just waiting to take you in for needed health care.

And we know who made that possible don't we. Of course. Those dedicated good samaritans of the non-working rich who have so much free time on their hands, they dedicated it all to you didn't they.

America thanks Herbert Pardes from the bottom of its overworked underemployed stagnated impoverished economic life for treating and saving so many lives in a hospital.

After all, it's about social justice. Any economist knows 16,800 months of food stamps doesn't come close to putting a price on it. That would be vile.
written by Kat, July 16, 2014 8:31
I really did not need to read the article to understand that Dr. Pardes is worth every damn penny-- just look at the photo! The doctor has mastered the contemplative gaze that conveys the proper amount of gravitas that all the best CEO's have mastered.
Anyway, BTP readers may take heart-- the numbers are helpfully placed in context by Princeton health care economist and Economix blogger (and faithful BTP reader no doubt): Pardes' compensation is just a drop in the bucket when compared to the entire budget of the hospital. Dr. Reinhardt adds that it is "obvious" that social envy is one reason that others may have a problem for such outsized pay.
I do not have a fancy chair at Princeton (or in my living room for that matter) so I am not qualified to comment on highly scientific explanations. I do have one more question. What is the compensation level that must be reached before you cease to be a cost to your organization?
The Math
written by Larry Signor, July 16, 2014 10:58
$5.6 million = 109 years of the 2012 median household income($51,371)...how is it possible for one human to be that productive?
Where is the outrage?
written by Jennifer, July 16, 2014 12:41
As a top executive of a tax exempt institution, Dr. Pardes is being subsidized by taxpayers.

Although, being New York, the numbers are higher, this is par for the course, That is to say taxpayers all over the country are subsidizing overpaid hospital CEOs. Everybody knows hospitals are run for profit, they should be taxed like it. The common argument for hospital non-profit status is that what they do not pay in taxes goes to charity care, which is a complete joke. In most urban areas one or two, often public, hospitals generally take all the uninsured/Medicaid patients and the rest have extra money to spruce up their lobby.

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.