ESCONDIDO ---- Palomar Pomerado Health's top executive has received a $154,000 raise, pushing his base salary from $582,000 to $736,000 per year, the chairman of the public health care district's board said Wednesday.
Chairman Bruce Krider said the board voted unanimously in a closed-session meeting Monday night to increase CEO Michael Covert's salary because his pay fell below the 50th percentile of similar-size hospitals, as measured by total net revenue.
"If you want to keep somebody, you have got to pay market rate," Krider said in a telephone interview. "He's a highly-performing executive that was underpaid for many years."
Covert's contract also includes a provision for a bonus of up to 50 percent of his base salary. Covert did not return a call for comment on his new contract, which supersedes a previous pact that guaranteed him a 5 percent cost-of-living adjustment and bonuses of up to 50 percent.
Krider said that after much deliberation, the board decided that automatic adjustments were not wise, instead opting to pay Covert in the middle of the pack among his peers at other hospitals of similar size.
The board chairman cited Covert's leadership, especially in the areas of quality health care delivery and executive vision, as reasons why he is worth the 26 percent raise.
Critics, however, have criticized Covert for the skyrocketing estimated price tag of an 11-story, $917 million "hospital of the future" under construction off Citracado Parkway.
The hospital was originally projected to cost $531 million in 2005, but the price jumped to $773 million in 2007 and to $957 million in early 2009.
The cutting of amenities and materials brought the project to its latest estimate of $917 million.
Krider said he does not believe that Covert was to blame for the escalation and said he and his fellow board members have been impressed with how the executive found ways to cut back while keeping the construction project moving forward.
"It's not his fault, no more than this current economy is (President Barack) Obama's fault. The world changes in its dynamic, and you have to find a way to navigate around the potholes," Krider said. "Michael is a good navigator."
That statement seems to run contrary to board statements made in April, when the elected body voted to give Covert no bonus because the organization failed to meet certain goals.
At the end of fiscal 2008 Palomar Pomerado Posted a $600,000 loss.
However, that pattern turned around, with the hospital system reporting an $11.3 million profit in fiscal 2009.
That number was short of the $25 million profit that was projected for the year.
So far this year, Palomar is on pace to hit the $25 million mark.
Covert continues to make significantly more than his counterpart to the west but less than the two men who helm the region's largest health care networks.
Neighboring Tri-City Medical Center, North County's other public health care district, recently inked a deal with new chief executive Larry Anderson for $480,000 per year.
Anderson's contract foregoes bonuses.
Better paid are the chief executives at San Diego County's largest health care providers, nonprofits Sharp HealthCare and Scripps Health.
Each operates multiple hospitals and clinics throughout the region.
According to a Sharp spokesperson, company CEO Michael Murphy makes $753,000 per year, and can earn a bonus of up to 25 percent, to run the county's largest private, seven-hospital health care network.
The most recent "form 990" tax form available for Scripps Health, which operates five hospitals in San Diego County, showed that CEO Chris Van Gorder made $1.2 million, including a bonus and retirement contributions, in 2007.
Scripps declined to provide a more recent figure.
According to the San Diego Association of Governments, San Diego County's inflation-adjusted median household income was $51,920 in 2008, up slightly from $47,360 in 2000.
