UMass Memorial’s Dickson proves he is worth $2.3M

This is a trying time to be a healthcare executive. Insurers and government officials are calling on the industry to curb rising costs, while simultaneously the demand for health care is growing, meaning the industry needs more workers, who need to be enticed with attractive salaries. It is easy to scoff at the $2.3 million in total compensation made by Eric Dickson, president and CEO of UMass Memorial Health Care in Worcester, and say he is overpaid. Dickson is the highest-paid nonprofit executive in Central Massachusetts. In fact, eight of the top 10 highest paid nonprofit executives work in the healthcare industry, according to the most recent data available from U.S. Internal Revenue Service filings. Yet, look at the value Dickson provides; while $2.3 million is a big number, it is much lower than what a private company executive would earn for leading a similar $2.4-billion enterprise. Since Dickson took over at UMass Memorial in 2013, he has trimmed the number of executives and cut the amount those executives got paid while at the same time increasing the average per-employee salary of every non-executive at UMass Memorial. Dickson’s predecessor, John O’Brien, made $3.5 million in total compensation in his final year. While not immune to the cost pressures impacting an organization of UMass Memorial’s size, Dickson managed to generate a total positive margin of $163 million in his first five years at the helm. While still the largest employer in Central Massachusetts, UMass Memorial has been forced to become more efficient and as a result, reduced it workforce 8%. At the same time, healthcare and social service jobs in Central Massachusetts grew by 11%. This shift has meant while UMass has been reducing staff, the likes of Family Health Center of Worcester, Edward M. Kennedy Community Health Center and Reliant Medical Group have all increased their headcounts, as WBJ News Editor Grant Welker points out in his story “Leading healthcare organizations in Central Mass. cutting total executive pay." As the industry grows to meet rising demand while simultaneously trying to curb costs, high-cost players like UMass Memorial will have to take on a reduced role. The most in-demand job expected for Massachusetts until 2026 is home health aide, a position typically making $30,000 annually and largely focused on helping people age in their homes. Part of the overall containment in healthcare costs will come from this shift towards lower-cost services from lower-cost providers. Could UMass Memorial hire a CEO for significantly less than Dickson’s $2.3 million and still have that person be an effective and efficient leader in a shifting industry? Maybe. But that would require the UMass Memorial board to strike gold on an executive it could hire at a discount, presumably because her/his effectiveness was unproven. And if that leader initially toiled away at a salary of, say, $500,000, other organizations would soon make job offers with far more attractive salaries. Executive compensation is tricky. Some leaders are overpaid, while others will outperform their salaries. Dickson’s results to date suggest he is up to the task of guiding the region’s largest employer.