The health care industry didn’t just provide a safe haven for jittery stock investors in 2022, a year defined by inflation and higher interest rates. It also provided a stable stream of wealth for top executives, who collectively pocketed billions of dollars in what was otherwise a rough patch for the economy.
By almost every measure, 2022 was a bad year for the stock market. But health care stocks fell significantly less than other companies as the amount of care received and prescriptions filled returned closer to pre-pandemic norms.
As a result, the CEOs of more than 300 publicly traded health care companies combined to make $4 billion in 2022, according to a STAT analysis of financial filings. That amount of money could buy Costco memberships for more than 66 million people, and it’s equivalent to the entire economic output of Sierra Leone.
That CEO haul was down 11% from the $4.5 billion recorded in 2021. But the sizable paydays highlight how every niche of health care — from Covid-19 vaccines and obscure technology to orthopedic implants and providing coverage to the nation’s poor — continued to supply its leaders with substantial sums of money even as more people struggled to afford food, housing, and, yes, health care.
“No matter how you slice it, the people at the top — the CEOs of these companies — are making enormous gains every year compared to ordinary Americans,” said John McDonough, a health policy professor at Harvard who has studied health care for nearly four decades. “This is the bitter fruit that we reap from telling the health care industry to act more like a business.”
No CEO made more than Moderna’s Stéphane Bancel, who took in nearly $400 million after governments around the world quickly bought the biotech company’s Covid-19 shot. Bancel is in the process of donating a vast majority of his income to charities. The 10 highest-paid CEOs — a list that also includes the CEOs of Thermo Fisher and McKesson — made a combined $1.4 billion, or about a third of the total studied. That amount is roughly what the National Institutes of Health spends annually to study drug abuse and addiction.
The irony with health care’s massive payouts, according to experts, is how the industry praises itself for attempting to find ways to lower costs. But health care still represents more than 18% of the U.S. economy — similar to what it was before the pandemic.
“Individual companies’ incentive is not to bring system costs down,” McDonough said.
Similar to last year, STAT analyzed executive compensation found in the annual proxy filings of more than 300 companies across all health care sectors — drugmakers and biotech firms, health insurers, hospitals, other providers, medical device firms, health tech companies, suppliers, and more. The analysis focused on companies that were worth at least $1 billion in March, based on data from financial database provider AlphaSense.
The data offer a detailed view of how top executives are incentivized, like how stock continues to comprise most of their compensation and how that drives the wide pay disparities between those in charge and those who work on the ground, like nurses, home health aides, and others. The analysis also highlights outliers within each sector, such as one biopharma CEO who made more than $90 million — all of which came from so-called “management fees.”