Pardes's Pay

Senator Grassley has been raising quite a fuss in Washington over the pay of the president of NewYork-Presbyterian Hospital, Dr. Herbert Pardes, and let us just say that from the distance at which we sit, Dr. Pardes appears to be worth every penny. He runs one of the best hospitals in New York City, which heals lots of sick patients and whose doctors every day are making important progress toward curing diseases. He runs New York's largest private-sector employer. He successfully managed a combination, or coexistence, of Cornell and Columbia medical colleges in an environment where egos and loyalties and cultures made other hospital and medical school combinations fail. For all this important work he is compensated at less than a tenth of the $50 million a year that his board chairman, John Mack of Morgan Stanley, makes.

We don't even fault the hospital for, as our Ira Stoll reports at page one, mounting an effort to get Congress out of its hair on the compensation issue by winning a Democratic majority in the Senate. It strikes us as illogical that nonprofits should be prevented or discouraged from engaging in the same political activity that business and labor are allowed to engage in. We'd caution, however, that the hospital trustees should be careful, because they might get what they wish for. A Democratic Senate might be less likely to investigate tax-exempt hospitals paying for luxury travel by the wives of executives. But it'd raise taxes in ways that'd limit the private sector economic growth that has been so beneficial to hospital fundraising. It'd be unlikely to enact tort reform to reduce soaring medical malpractice insurance premiums. And while politicians can raise taxes again and again to pay for more generous reimbursements to hospitals, at a certain point, the voters — especially in New York City, where both Medicaid costs and taxes are among the nation's highest — are going to get tired of paying the bills.

Mr. Grassley's significant insight is that it is getting hard to distinguish the for-profit hospitals from the not-for-profits in terms of charity care and executive compensation. In New York State, it's hard to even make a comparison because of a state law that essentially bars publicly owned for-profit hospitals of the sort that flourish in other states. At the moment most New Yorkers feel they are getting their money's worth from their hospitals, but if the hospitals press their political advantage too far, voters may start to wonder why the non-profits are so desperate to keep out for-profit competition.