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Mayo Clinic top leaders see raises of up to 27% in 2021

After keeping their compensation mostly flat in 2020, Mayo Clinic gave its executives big raises in 2021, with 26 employees earning more than $1 million.

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Mayo Clinic's Gonda Building in downtown Rochester.
Joe Ahlquist / Post Bulletin file photo
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ROCHESTER, Minn. — While many Mayo Clinic executives didn’t receive raises in pandemic-plagued 2020, those wages jumped up in 2021 with the CEO’s salary climbing by 27%, to $3.48 million.

Following losses due to the COVID-19 pandemic , top Mayo Clinic executives, such as CEO Gianrico Farrugia and then-Chief Administrative Officer Jeff Bolton, took small pay cuts in 2020.

Farrugia’s compensation dropped by 1%, from $2.77 million in 2019 to $2.74 million in 2020. Similarly, Bolton’s pay went from $1.73 million in 2019 to $1.69 million in 2020, which is a decrease of 2%.

In 2021, Mayo Clinic started ramping wages back up. The top-paid employees saw the largest raises.

Farrugia's compensation climbed by 27% in 2021, while Bolton’s increased by 24% to $2.11 million. Florida campus CEO Kent Thielen saw his pay grow by 20%, to $1.79 million, in 2021, up from $1.48 million. Arizona CEO Richard Gray’s earnings climbed to $1.78 million in 2021, which was a 26% increase from $1.41 million in 2020.

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Former Mayo CEO John Noseworthy received $3.45 million in compensation in 2018, so Farrugia has surpassed him with his current compensation.

This salary information is available because Mayo Clinic is a nonprofit, required annually to report top salaries to the IRS in a public document called a 990 form. The most recent Mayo Clinic 990s are from 2021, when it listed the compensation for 253 of its top employees.

A total of 26 Mayo Clinic employees reported compensation of more than $1 million in 2021. That was up from 23 in 2020 and 21 in 2019.

When asked about the 2021 executive raises, Mayo Clinic Spokeswoman Ginger Plumbo responded with a statement.

“Mayo Clinic is the top-ranked health care provider in the country in large part because of our staff. A structured compensation program has been used for salaries at Mayo Clinic for more than 45 years to remove financial incentives to do more than is necessary or less than required for the patient,” she wrote. “There are no incentives or bonus pay. Executive compensation is no exception to this model and is necessary to deliver on our plan to cure, connect and transform health care.”

Mayo Clinic’s documentation of its highest paid employees include columns for “Bonus and incentive compensation” and “Other reportable compensation” in addition to “Base compensation” and “Nontaxable benefits.”

While Farrugia’s base compensation was $2.71 million in 2021, his “Other” compensation was $676,292. He also reported “Retirement and other deferred compensation” of $58,225 and $38,289 of “Nontaxable benefits.”

Mayo Clinic Treasurer Paul Gorman, who earned $1.27 million of total compensation in 2021, reported bonus compensation of $290,952 and $111,317 in other compensation. His base salary was $786,080.

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Nonprofit hospital executive compensation has long been a subject of industrywide debate.

Gianrico Farrugia, new Mayo Clinic CEO
Dr. Gianrico Farrugia.

Hospitals say they need the higher salaries to attract and retain employees who could make more in the for-profit sector. Critics say that the executives should not take home multi-million-dollar paychecks, while bedside caregivers have to fight for much smaller raises.

The Lown Institute, a health care think tank, recently looked at the 2018 compensation at more than 1,000 nonprofit hospitals. The leaders of teaching hospitals, such as Mayo Clinic, reported greater compensation on average, according to the report.

They discovered that, on average, nonprofit hospital CEOs made eight times what workers without advanced degrees earned. The CEO to employee ratios ranged from 2-to-1 to 60-to-1.

The highest paid nonprofit hospital CEO in 2018 was Kaiser Permanente’s Bernard Tyson, who earned almost $18 million. Javon Bea, CEO of Javon Bea Hospital and a Rochester developer, received $9.36 million from his much smaller health system in 2018.

Novant Health Inc., based in Winston-Salem, paid $4.47 million to CEO Carl Armato in 2021. That was a 10% raise from 2020. Sanford Health, which is in talks to acquire Minnesota’s Allina Health, paid $3.3 million to its CEO and President Bill Gassen 2021. In 2020, Allina paid out $49 million to its outgoing CEO Kelby Krabbenhoft .

Elsewhere across Mayo Clinic, the majority of employees are seeing their pay increase, if not as quickly as the paychecks of many executives.

Looking to 2023, Mayo Clinic recently announced eligible, non-union employees will receive raises of 6% to 9%. That is step up from Mayo Clinic’s 4% raise in 2022. The 600 food service staffers who work for Morrison Healthcare on Mayo Clinic campuses recently agreed to a five-year contract, which includes a minimum 7.5% raise .

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Every nonprofit hospital, including Mayo, is required to provide free or discounted care, also known as "charity care," to maintain its nonprofit status with the IRS and reap the benefits of tax exemption. Experts say that financially strong nonprofit hospitals need to be doing more to make it a fair exchange.

Dr. Elizabeth DePeri, a diagnostic radiologist who worked on Mayo Clinic’s Jacksonville, Florida, campus, was the fifth highest paid employee in 2021, at $1.78 million, even though she had a “base compensation” of $0.

Mayo Clinic reported that the one-time payment to DePeri was “In conjunction with the settlement of an employment dispute.” DePeri, who worked for Mayo Clinic for 19 years, was dismissed in September 2019, after not being able to agree on “reasonable accommodation” for her diagnosed disability. The case was settled by mediation in November 2021.

DePeri was the only woman in the 20 highest paid Mayo Clinic employees in 2021.

Jeff Kiger writes a daily column, "Heard Around Rochester," in addition to writing articles about local businesses, Mayo Clinic, IBM, Hormel Foods, Crenlo and others. The opinions of my employer do not necessarily reflect my opinions. He has worked in Rochester for the Post Bulletin since 1999. Send tips to jkiger@postbulletin.com or via Twitter to @whereskiger . You can call him at 507-285-7798.
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