How much did Philly-area nonprofit health system CEOs make in 2023?

Executives of the region’s largest systems — by revenue and by hospital count — generally received the largest pay packages in 2023, according to an Inquirer review of 990 tax forms.

But there were exceptions on the high and low ends.

Capital Health’s Al Maghazehe’s $3.55 million ranked him among the top five highest-paid CEOs for the fourth year in a row, despite Capital’s $1.2 billion in revenue ranking in the bottom half of health systems. Capital declined to discuss his compensation.

That’s 30% more than the $2.72 million that University of Pennsylvania Health System’s Kevin Mahoney got for running a health system with $10.9 billion in revenue that year.

Penn’s pay package for Mahoney ranked in the middle of the pack for CEOs of nonprofit health systems. Mahoney’s compensation was comparable to Janice Nevin’s at ChristianaCare, which had a third as much revenue.

The Philadelphia region’s top earner was Thomas Jefferson University’s Joseph G. Cacchione, who received $5.38 million in 2023, his first full year in the position, when it took in roughly $900 million less revenue than Penn but operated more hospitals. The next year, he led Jefferson’s acquisition of the Lehigh Valley Health Network, creating a system with $15 billion in revenue and 32 hospitals stretching from South Jersey to Scranton.

Second to Cacchione in the ranking was Madeline Bell of the Children’s Hospital of Philadelphia. Bell, who has been CHOP’s CEO since 2015, received $3.75 million.

Compensation for nonprofit health system leaders has spurred intense debate in recent years. Scrutiny by members of Congress and patient advocates typically focuses on whether health systems and their well-compensated CEOs provide enough charity care to justify their tax exemptions.

In Pennsylvania, a high-profile court case has played out involving Tower Health’s bid to get a property tax exemption for Pottstown Hospital. The Pottstown School District objected, arguing that Tower Health tied too high a percentage of executive pay to profits to qualify for tax exemption.

The Pennsylvania Supreme Court decided in a 5-2 decision in May that it is acceptable to tie executive pay to profitability, because nonprofits need to compete with for-profit companies for talent to run increasingly complex businesses.

The decision could have significant implications for health system CEO compensation. That’s because the court determined that the pay structures for individual hospital CEOs were key to questions of property tax exemption, rather than the compensation for CEOs of entire health systems. But it’s too soon to know what impact that decision will have on CEO paychecks.

Here’s a look at The Inquirer’s review of the latest 990 tax returns of 20 nonprofit health systems, covering 10 health systems with operations concentrated in Southeastern Pennsylvania, seven in South Jersey, and two in northern Delaware:

Executives at New Jersey health systems took five of the top 10 spots in The Inquirer’s ranking.

A $1 million severance payment lifted AtlantiCare’s former CEO Lori Herndon into the No. 3 spot. Her total was $3.63 million. AtlantiCare’s board chair, Michael Charlton, replaced her as CEO in June 2023. His pay for half the year totaled $791,634 that year.

Trailing Maghazehe, who was in the fourth spot, was Virtua Health’s CEO, Dennis Pullin, whose pay totaled $3.49 million. Virtua had $2.8 billion in revenue in 2023, compared to about $1.2 billion at AtlantiCare and Capital.

Cooper University Health Care’s co-CEOs Kevin O’Dowd and Anthony Mazzarelli ranked sixth and seventh. O’Dowd’s compensation was $3.19 million, about $100,000 more than Mazzarelli’s $3.09 million.

Cooper has an unusual management structure, with O’Dowd and Mazzarelli sharing management duties atop the South Jersey nonprofit since 2019 — a period during which Cooper’s finances have shown significant improvement.

The combined pay of O’Dowd and Mazzarelli equaled $6.27 million in 2023. That amount would top The Inquirer’s latest ranking of compensation for nonprofit health system CEOs in the Philadelphia region if it went to an individual.

Beth Green, Cooper’s chief human resources officer, noted in a statement that Cooper has no chief operating officer. “To evaluate Cooper against other regional health systems, you would have to combine the salaries of their CEO and their COO positions,” she said.

The Inquirer looked into how Cooper’s arrangement compared to health systems with at least as much revenue as Cooper’s $2.2 billion. (Not every health system has a chief operating officer.)

There is one place where two top executives make more than O’Dowd and Mazzarelli at Cooper.

Thomas Jefferson University does not have a corporate-level chief operating officer, but it does have a president of healthcare operations. Jefferson had $6.4 billion in patient revenue in fiscal 2024 — more than three times Cooper’s patient revenue. The combined compensation for Baligh Yehia, president of Jefferson Health, and Cacchione was $7.72 million.