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Healthcare facility operators' CEOs land higher paychecks in 2017

While the salaries of CEOs from healthcare facility operators rose in 2017, there was a drop in the compensation of executives heading the medical suppliers.

Alan Miller, founder and CEO of hospitals and outpatient facilities operator Universal Health Services Inc., took home the highest salary with a compensation of $21.6 million, which increased about 9% from the previous year.

The Pennsylvania-based company, which also had the highest CEO pay ratio of 541x, said Miller's 2017 base salary exceeded the peer and general industry groups due to his long tenure, performance and reputation within the sector.

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Second on the list was San Francisco-based pharmaceuticals and medical supplier McKesson Corp.'s CEO John Hammergren with a compensation of $20.1 million, a drop of 15% from a year earlier.

The company faced a shareholder revolt led by The International Brotherhood of Teamsters, which began a vote-no campaign in 2017 against the drug distributor's executive pay plan and blamed the company for fueling the U.S. opioid crisis.

Acknowledging in a proxy filing that McKesson did not perform at its historical levels, the company also changed its incentive plan metrics, which reduced Hammergren's nonequity incentive plan compensation to $4 million in fiscal year 2018 from $6 million a year earlier.

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Other drug distributors to figure on the list were Cardinal Health Inc. and AmerisourceBergen Corp., both of which reduced compensation for their CEOs.

Cardinal Health CEO George Barrett's compensation dropped by 19.6%, and Steven Collis from AmerisourceBergen was paid 0.7% less compared to 2016.

Dublin, Ohio-based Cardinal Health said it failed to achieve the earnings goal under its annual incentive plan, as a result of which Barrett was not given any payout under the nonequity incentive plan compared to $2.4 million awarded to him in 2016.

On the other hand, compensation for CEOs of healthcare facilities operators DaVita Inc., LifePoint Health Inc., Laboratory Corp. of America Holdings and Quest Diagnostics Inc. increased by 24.6%, 7.9%, 7.1% and 0.9% respectively.

The list also included the heads of two major pharmacy benefit managers. Express Scripts Holding Co.'s CEO Timothy Wentworth received the third-highest salary with $15.9 million, while CVS Health Corp.'s Larry Merlo took the biggest pay cut of 33.3% among the top 10.

CVS reduced Merlo's annual bonus as the company reported 2017 operating profits below target. His nonequity incentive plan compensation dropped to $3.1 million in 2017 from $7.9 million in 2016.

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