Kaiser Permanente Cuts CEO’s Pay After Loss
Kaiser Permanente Group, the nation’s largest health-maintenance organization, cut its chief executive’s compensation after the company reported its first loss. CEO David Lawrence said he won’t receive a bonus this year because his Oakland-based nonprofit HMO lost $270 million in 1997 as it failed to raise premiums in sync with rising costs. He declined to say how much his pay was cut. In 1996, Lawrence earned $1.22 million, according to state regulatory filings. Salaries of HMO executives are coming under increased scrutiny as consumer groups back legislation to boost rights of plan members. Advocacy group Families USA last week criticized HMO executives for increasing their pay while arguing that regulation will raise costs. Kaiser has also said it plans to raise premiums in the coming year. “At the same time the industry is complaining about pennies being spent for consumer protection, they’re showering their executives with millions of dollars in compensation,” said Ron Pollack, the group’s executive director.