Blue Cross: Joe Frick's salary
It's easy to gripe about insurance companies and how much money their executives are making, especially when there are so many people without coverage and so many businesses struggling to pay premiums for their workers. Of course, it all depends on the benchmarks you use to judge. Whatever benchmark you use, it would be nice to earn $2.7 million a year, like Independence Blue Cross's Joe Frick did, in 2007, according to the Pennsylvania Insurance Department.
Blue Cross: Joe Frick's salary
It's easy to gripe about insurance companies and how much money their executives are making, especially when there are so many people without coverage and so many businesses struggling to pay premiums for their workers. Of course, it all depends on the benchmarks you use to judge. Whatever benchmark you use, it would be nice to earn $2.7 million a year, like Independence Blue Cross's Joe Frick did, in 2007, according to the Pennsylvania Insurance Department.
Today, the Pennsylvania Insurance Department released a report on the executive compensation of the state's two largest "Blue" plans, Independence Blue Cross here in Philly and Pittsburgh's Highmark Inc. Essentially the department found that Joe Frick from Independence and Ken Melani from Highmark are reasonably compensated within the milieu of other Blue plans nationally and in comparison with what is paid to top executives in nonprofit hospital systems.
That's essentially what my fellow Inquirer reporter Craig McCoy and I found when we analyzed their pay as part of our look at the then-proposed merger between the two health plans.
If you automatically assume that a nonprofit executive earns little to nothing working in a tiny storefront with battered file cabinets, then you aren't in the same league as these guys. If you think that no one working with sick people should be earning this kind of cash, you are also going to have a problem with the $3.6 million that Melani earned. And you are going to have an even bigger problem when you learn that Melani's compensation doubled in five years and Frick's tripled, from $916,406 to $2,781,275.
"Our focus was on comparability because that is the legal standard and also what drives competition for executive talent," Insurance Commissioner Joel Ario said in a statement announcing the report. The report uses material gathered during the merger process. That merger ended in January when the two companies withdrew.
"Whether the compensation scale is fair in a broader public policy sense, or whether new regulations are needed, are questions that are appropriately left to the legislative branch," Ario said.
Executive pay is a deeper discussion than this, obviously. When you have an organization, nonprofit or for-profit, with billions in assets and thousands of employees, the executives should be well-compensated. And certainly, Melani and Frick's for-profit CEO compadres are making a lot more than they are. Another certainty -- these men have a lot of responsibilities, responsibilities that never, ever go away. There is no such thing as a vacation, a night off, or a weekend off. They get their time off in several-hour stints, stints that can be and are interrupted at any time.
Even so, when executive compensation in total, with bonuses and salary and perks, moves close to $2 million -- that seems too high to me, especially in the case when the executives have no capital of their own at risk. I don't care what they are running and I also don't care what they "give back" to charity, although we are grateful for anyone's largesse. Heck, we'd all like to "give back" to our favorite charities.
Even if you don't include legitimate expenses, like a driver, home security systems, and a reasonable amount of wining and dining in nice places, a $2 million compensation package comes to $220 an hour, assuming that the executive works 24 hours a day, seven days a week. I'm willing to make that assumption, given their level of responsibility. I'm sure they spend many sleepless nights. But after a certain point, that exec money needs to go elsewhere -- into research and development to grow the company, into better pay for employees, into investment in new machinery and upkeep of old machines. That's how businesses sustain themselves and grow. It helps if the employees earn enough to afford the good or service they produce.
A growing business is an employing business, and that's what we need now. Frick and Melani's pay may be reasonable against benchmarks of other CEO pay, but there are other benchmarks -- benchmarks that can and should be applied to many other CEOs besides Frick and Melani.
Joe Frick is no different than Al Capone. Frick; Chris Butler, and Rosemary Park are filling up their nest eggs with premium increases on all of the unions who built this town. Stop into 19th and Market and go into the Customer Service on the first floor. It's like going to a bank. The senior citizens walk in with their social security checks and hand them over. There has not been one innovative idea submitted by the IBC management in almost two decades. QCARE, invented in 1987 is the last time these carpet baggers offered anything to lower and manage health care costs. They have spent hundreds of millions of dollars in subscriber premiums to install new claims systems that were flawed and inefficient - and then they pass the costs back to subscribers in higher deductibles and premiums. Now that they can see the end is near, and their legalized extortion of the elderly, poor and union labor is coming to a close; they try to pull off a merger with Bugsy Moran's guys from Pittsburgh. I hope they take the packages that they are offering to reduce the workforce. If not, the PA Insurance Commissioner should send a regulator in there to straighten things out. Frick would not have been allowed to operate like this if Herb Dennenberg was still the Insurance Commissioner.— mikeyg- A salary in excess of $1 MM per year, for any individual who does not have his/her own wealth or capital at risk, is shame worthy.— willll
- Question - With all of the union plans and premiums, why not join forces and operate your own hospital and /or testing facilities and /or family and specialty practitioners offices? I am sure that factual data is available in order to make sound business decisions. Cooperation amongst unions would also have to occur. Or, the unions could just buy a hospital. While you are at it, start a mega bank / credit union. It could work in Philadelphia.— stmash13
- At 56, CIGNA's CEO is retiring at the end of the year. Mikeyg is right-on!— The Baron
Comment removed.- Marx and Obama are right, execs make too much money. The government should control minimum and maximum wages - say between $15 to $25 per hour. Everyone is apportioned an equal slice of the economic pie, regardless of ability or how much they work. All profits to the government so they can redistribute as they see fit! Just like the Democrat mayor of Hoboken!— Trugbydog
- I work for IBC stop bashing my CEO. He does his job, and loves this company. And for the record, he gives away almost half of what he makes, to charity.— Tayon
- Interesting but loving your company is not a prerequisite for responsible stewardship. Being a former employee of IBC it became very clear that in today’s health care system all the dollars reside with the insurance companies. The duplication of services across company business lines, the inefficiencies of their system technologies, the silo mentality that resides within departments all would spell doom for a company that operates in the normal supply and demand economy. However IBC is an oligarchy that sets its own prices and looks to reduce competition. Couple this with managers and senior directors who have never experienced modern business thinking or theory, and you have an 8,000 employee, 20% yearly premium hikes, bottomless pit. The question that must ultimately be asked is what does it say about our society when the providers of health care (hospitals, doctors, nurses and other professionals) struggle on a daily basis to provide care, while IBC adds strata of managers invest in outdated and questionable technologies and claim to be non-profit and on a social mission yet will not cover pre-existing conditions and runs billion dollar surpluses. If this nation is serious about healthcare reform then 1901 Market would be good place to begin major surgery.— dreamkiller
- Why the sharo focus on Frick and Melani when the Aetna adn Cigna CEOs make 10 times what Joe and Ken make? Someone has to ask if $25MM per year is too much.— RustyJames
- Thank you for your comments, dreamkiller. I agree. This article made me nauseous.— Jen D
- Hey tayon obviously you wasn't a part of the wave of lay offs at IBC. IBC is just a awful working environment in terms of the dept's management styles.— Jayjayhithard
- Hey tayon obviously you wasn't a part of the wave of lay offs at IBC. IBC is just a awful working environment in terms of the dept's management styles.— Jayjayhithard
- So the talk is now of not for profit coops. Independence Blue Cross is a Not for Profit. The top 7 IBX Executives earned a total of $9.2 million in 2008 up 15.3% from 2007. What was the average salary increase in industry during that year? I know in my company if you received any increase, even 1% or 2% you were grateful. So who controls salaries in Not for profits? Why did one of IBX executives receive a 92% increase? Is a not for profit a money making machine for the executives? Are we jumping out of the frying pan in to the fire with the idea of Coops? Will they be money making schemes for their executives?— HealthCareReformRob
