CentraCare tax filing reveals pay for execs, top docs

May 25--As the largest employer in Central Minnesota, CentraCare Health has almost 9,000 employees spread throughout six hospitals, six nursing homes, senior housing in six communities and 17 clinics.

The total payroll and benefits for all those during the last fiscal year was almost $625 million.

Recently filed IRS Form 990s from CentraCare Health System, St. Cloud Hospital and CentraCare Clinic obtained by Times Media show about 3.7 percent of that total -- about $23.1 million -- was concentrated among the top 47 wage earners in the organization.

Recently retired CentraCare President and CEO Terry Pladson topped the list with more than $1.6 million in salary, benefits and other compensation. Three interventional cardiologists with CentraCare Clinic also surpassed the $1 million mark. And seven other administrators and eight other physicians all made more than $500,000 between July 1, 2013, and June 30, 2014, or fiscal 2014.

While that sounds like a lot, it might be a bargain compared to other not-for-profit health systems in Minnesota. According to the most recent 990s available from Minneapolis-based Allina Health System and Bloomington-based HealthPartners, St. Luke's Hospital in Duluth, Sanford Health in Fargo, North Dakota, and the Mayo Clinic Health System in Mankato, CentraCare's salaries are lower than most, although higher than some.

For fiscal 2013, Allina Director/President/CEO Kenneth Paulus was paid more than $2.7 million in wages and other compensation. His counterpart at HealthPartners, President/CEO Mary Brainerd, was paid more than $2.1 million. And at Sanford Health in Fargo, President/CEO Kelby Krabbenhoft was paid almost $1.6 million. The top executives at St. Luke's in Duluth and Mayo Clinic Health System in Mankato made about $758,000 and $491,000, respectively.

You can draw similar comparisons for top-paid physicians. Allina had five making more than $1 million, including one at almost $1.7 million. The top doctor at St. Luke's was paid more than $1.25 million, and five at Sanford Health Fargo were paid more than $1.5 million -- including three over $2 million. And, at the Mayo Clinic Health System in Mankato, the top physician was paid more than $830,000.

"Our objective is to be just slightly over the midpoint on doctors and right around midpoint on executives," said Dr. Ken Holmen, who replaced Pladson as CentraCare president and CEO on Jan. 1. "The challenge is, that may not be good enough."

Holmen previously was chief medical officer at Regions Hospital in St. Paul and a vice president with HealthPartners. Holmen's CentraCare salary will not be publicly disclosed until the fiscal 2015 Form 990 is filed, likely next spring. His last reported salary at Regions was about $815,000.

"We want to be transparent, and there's nothing in those (990s) that we should be ashamed of," said Holmen, who reviewed four years of them and said he found no surprises or anomalies before taking the position at CentraCare. "What we pay our administrators is well-benchmarked. It's not high. It's not low. It's somewhere in the middle and it's evaluated every year by people outside our board."

Still, he understands how people may link a few high salaries with rising health-care costs.

"When an average layperson sees the money that's reported, I get their reaction," Holmen said. "I'm from a small town in Iowa. The most money my dad ever made was $18,000 a year. We got food stamps. I understand. That's very real to me. On the other hand, in order to fulfill our community need we need a methodological approach that's governed at the highest levels by the community. And I think we can be proud and rest assured that our board members and operating committees all take that very seriously. They are impartial and they set the compensation."

CentraCare annually engages SullivanCotter, a consulting firm with an office in Minneapolis that works with many of the largest nonprofit organizations in the country. The company provides general and specific reviews on compensation. After Holmen came to St. Cloud, he also asked for an aggregate compensation comparison on executives and doctors between CentraCare and similar organizations.

"I didn't have any cause for concern, but I wanted to know," Holmen said. "They came back and said we were leaner than most, under the median."

Ultimately, the CentraCare board sets compensation for those at the higher levels.

"Many of those people are paying payrolls in their own companies and they know how this works," said Greg Klugherz, CentraCare's treasurer and chief financial officer. "I think that assures some level of reasonability even if compared to what I thought I'd make in my lifetime, it looks high.

"We think our process is solid and, you know, if you're going to take the paycheck, you can't be embarrassed by what's on it," Klugherz added.

There are other important facts reported in the 990s:

--CentraCare Health System, St. Cloud Hospital and CentraCare Clinic provided more than $22.3 million in care in fiscal 2014 that was uncompensated, either because it was considered charity care or turned out to be bad debt.

--CentraCare Surgical Center performed 3,413 surgeries in fiscal 2014.

--CentraCare Health System and St. Cloud Hospital had 1,679 volunteers in fiscal 2014 who donated a total of more than 137,000 hours.

--St. Cloud Hospital, which has 489 beds, had 25,561 inpatient admissions with 111,383 associated patient days. Outpatient encounters were 258,032 and included emergency room services.

--CentraCare Clinic had 278,709 visits in fiscal 2014, performed 538,523 lab tests, 956,248 immunizations or injections and 22,588 radiology tests.

--The hospital's service area includes Stearns, Benton, Sherburne, Crow Wing, Douglas, Kandiyohi, Meeker, Mille Lacs, Morrison, Pope, Todd and Wright counties, with a population of more than 680,000 people. The population in the immediate service area (Stearns, Benton, Sherburne) is projected to grow 2.3 percent by 2019, with the 65-and-older population to jump 17.1 percent in the same time.

As more baby boomers retire, however, and move from commercial to government insurance, systems like CentraCare will be stretched to be economical and that inevitably leads back to salaries, which Holmen said account for a majority of expenses. Government insurance typically reimburses health care providers at two-thirds the commercial rate, Holmen said.

He believes St. Cloud can compete with Twin Cities health care institutions for employees and, to assure he's guiding CentraCare toward that end, he's asked for a review of his own performance six months into his new job.

"I really only have two jobs -- win friends and influence people is one," Holmen said. "The second is 'How do I get you the resources to do your job?' That's it. And the number one way to attain or retain someone is not money. It's the stuff around that. Do they like working with you? Do they like their supervisor? At CentraCare, we're trying to have a culture. Anyone could go somewhere else if they wanted to make more. Does the money need to be fair? Yeah, I think so."

Follow Kevin Allenspach on Twitter @KevinAllenspach. Call him at 255-8745.

CentraCare Health System 990.

CentraCare Health Quarterly Financial Disclosure.

CentraCare Clinic 990.

St. Cloud Hospital 990.

CentraCare Health System compensation

Below are the compensation figures for the employees above $200,000 with the CentraCare Health System, according to its recently filed Form 990 for fiscal 2014. (Compensation includes W-2 report, nontaxable benefits and other compensation from related organizations.)

Terence Pladson, president/CEO, $1,613,435.

Gregory Klugherz, treasurer/CFO, $758,091.

Robert Stocker, director and OB-GYN, $559,170.

Paul Harris, corporate secretary, $520,896.

Thomas Leither, director and nephrologist, $452,098.

James Davis, vice president, $419,507.

Mark Larkin, vice president of development, $352,685.

Joseph Blonski, physician, $327,964.

Gerry Gilbertson, Melrose administrator, $308,711.

Daniel Swenson, Long Prairie administrator, $292,920.

Mary Phipps, director, $258,447.

Kevin Switzer, associate director, $240,443.

Joseph Hellie, vice president, $211,682.

Mary Wells, Monticello administrator, $209,608.

Jimmie Browning, associate director, $207,976.

Delano Christanson, Sauk Centre administrator, $206,015.

St. Cloud Hospital compensation

Below are the compensation figures for the employees above $200,000 with St. Cloud Hospital, according to its recently filed Form 990 for fiscal 2014. (Compensation includes W-2 report and other compensation from related organizations.)

Craig Broman, president, $854,619.

Mark Matthias, vice president, $565,292.

Maria Mallory, director/chief of staff, $544,106.

Jon Bowar, physician, $527,314.

Edward Martin, director, $511,392.

Linda Chmielewski, vice president, $486,763.

Mary Lunde, physician, $455,842.

Duane Rasmusson, vice president, $450,938.

Sarah Carter, director, $414,113.

Amy Porwoll, vice president, $410,822.

John Schmitz, physician, $368,195

Joel Spalding, physician, $358,852.

Chris Mollentine, physician, $330,370.

Linda Doerr, vice president, $327,389.

Kurt Otto, vice president, $310,852.

Cinda Melloy, director, $274,470.

Daniel Whitlock, former vice president, $247,468.

Robert Johnson, director/heart and vascular center, $231,977.

Charles Dooley, former vice president, $223,128.

CentraCare Clinic compensation

Below are the compensation figures for the employees above $200,000 with CentraCare Clinic, according to its recently filed Form 990 for fiscal 2014. (Compensation includes W-2 report and other compensation from related organizations.)

Wade Schmidt, interventional cardiologist, $1,039,827.

Bernard Erickson, interventional cardiologist, $1,021,422.

Howard Zimring, interventional cardiologist, $1,008,811.

Jacob Dutcher, interventional cardiologist, $971,153.

Richard Aplin, interventional cardiologist, $947,981.

David Roberts, chair/gastroenterologist, $648,926.

David Tilstra, director/president, $560,251.

Donald Jurgens, director/oncologist, $541,840.

Keith Leavell, director/pulmonologist, $526,848.

George Morris, medical director, $389,462.

Mark Murphy, VP operations, $373,179.

Thomas Feldhege, treasurer/CFO, $260,596.

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