Clark Memorial Hospital cuts executives' salaries 10 to 12 percent

By DAVID A. MANN, Evening News
David.Mann@newsandtribune.com

The leaders at Clark Memorial Hospital are taking pay cuts as much as 12 percent in response to the sputtering economy.

Martin Padgett, hospital president and chief executive officer, said hourly employees have been seeing reduced hours, so the pay cuts for hospital executives were a way to save money and show solidarity.

The pay cuts, which affect 38 hospital leaders, range from 10 percent to 12 percent, depending on position. Padgett, along with the hospital's vice president, took the largest cuts. They went into effect two weeks ago. The move is expected to save the hospital $42,000 per month. He said it should only be temporary, noting that the move would be re-evaluated every two weeks.

Every industry has a way of dealing with down volume, Padgett said. For hospitals, when the number of patients are down, the number of staffers are reduced as well.

"We just thought it was appropriate considering the global economy that the salary folks - particularly the leaders - take a cut as well," he said. "We celebrate as a team and we deal with adversity as a team."

Health care is not immune to a recession, according to Uric Dufrene, Sanders chair of the Indiana University Southeast Business Department.

"Job losses reduce the likelihood that someone may be insured. So I suspect the hospitals are probably doing more emergency room work now as opposed to prior to the recession.

"Payments for emergency services probably lag insurance reimbursements, thus contributing to potential cash-flow issues."

Another issue is that patients likely view a health care bill as the last bill they have to pay compared to a mortgage or credit card, Dufrene said. Often, patients do not pay the bill in full, but might only send a small monthly payment.

"This can also lead to budgetary issues for any hospital," Dufrene said

Clark Memorial is the largest hospital in the county, with 241 beds. Saint Catherine Regional Hospital in Charlestown has 96 beds.