Amid growing federal scrutiny of the high salaries of chief executive officers at the nation's nonprofits, at least a half-dozen chief executives at Allegheny County's largest hospitals and health systems last year received annual compensation above the national average.

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Jeffrey Romoff, the chief executive officer of the University of Pittsburgh Medical Center, led the way with $2.4 million in salary and bonus for the fiscal year ended June 2004 -- more than double the $925,500 average for hospitals with revenue exceeding $1 billion, according to the trade publication Modern Healthcare.

Overall, seven local hospital and health system CEOs collected more than $500,000 in compensation and benefits in either the 2004 fiscal or 2003 calendar year, according to filings that nonprofit groups make each year with the Internal Revenue Service. Of those, six received pay that exceeded Modern Healthcare's national averages, based on its annual survey of executive compensation that was released this month.

UPMC officials noted that Romoff runs an organization that is one of the largest nonprofit health systems in the country, with $5 billion in revenue and nearly 40,000 employees. It might be more complex than others, too, because it includes a large number of for-profit subsidiaries. UPMC contends that some 35 percent of its revenue now comes from for-profit ventures, including its health insurance subsidiary.

Both those arguments make sense to Jim Freundt, a principal with Sullivan, Cotter and Associates Inc., a Chicago firm that works with nonprofit hospitals on executive compensation issues. Freundt's firm assisted with Modern Healthcare's report on CEO pay.

Compared with for-profit executives in Pittsburgh, Romoff's pay is off the charts -- it's not even in the top 50 of the region's highest-paid executives at public companies. The lowest-paid executive on the Post-Gazette's annual Fortunate 50 survey of locally based for-profit companies was $3.6 million last year, and the average payout to those executives was $10.4 million.

Still, within the health-care arena, Romoff's compensation stacks up well.

For example, the chief executives at two of the country's largest for-profit hospital systems, Jack O. Bovender of Nashville, Tenn.-based HCA Inc., and Trevor Fetter of Santa Barbara, Calif.-based Tenet Healthcare, both earn less in salary and bonuses than Romoff even though their organizations are roughly quadruple and double the size of UPMC, based on revenue, respectively.

But stock awards and other compensation that's unavailable to nonprofit chiefs such as Romoff change the picture somewhat. Fetter's total payout last year hit $4.8 million, including $1.96 million in salary and bonus, while Bovender received $1.95 million, including $1.36 million in salary and bonus. Both also are sitting on options and stock holdings worth tens of millions more, a perk not available at private nonprofits.

Among nonprofit health-care giants, the top executives at Memorial Sloan-Kettering Cancer Center in New York and the Cleveland Clinic Foundation topped The Chronicle of Philanthropy's annual survey of compensation for nonprofit CEOs last year, with each making about $1.7 million in base compensation. Romoff apparently out-earned both men, but the Chronicle on Philanthropy's survey doesn't include CEO pay for every nonprofit group in the country.

More broadly, it's difficult to say who is the top earner among nonprofit hospital and health system CEOs because some don't list CEO pay figures on their IRS filings. UPMC and Ohio Valley General Hospital in Kennedy are two examples of hospitals that pay their chief executives through an independent management company and therefore don't list the salary on the IRS filing.

In fact, UPMC voluntarily disclosed Romoff's salary this week to the Post-Gazette, part of a change in policy that it says will result in the annual disclosure of the CEO's pay in future years.

The obfuscation of nonprofit CEO compensation is coming under increased scrutiny.

The IRS and the Senate Finance Committee have recently stepped up their review of governance practices at nonprofits with a focus on executive compensation. And an influential committee of nonprofit executives recommended in June that Congress adopt a series of reforms including changes to the IRS forms so that total compensation of CEOs is more clear to the public and regulators.

"Boards of directors always took this seriously, but they're taking these responsibilities very seriously, now," said Freundt, the compensation expert.

UPMC officials say they no longer pay Romoff's salary through a management company, in part to boost transparency in the health system's governance. Romoff became an employee of UPMC on July 1, so his salary will be reported on the health system's IRS form for fiscal 2006, said Robert Cindrich, the general counsel for UPMC.

Romoff's pay package for fiscal 2004 included $950,000 in base compensation plus a $1,022,500 bonus for the health system's performance that year. In fiscal 2004 Romoff also received $427,400 as a bonus for the long-term performance of UPMC, which over the course of the past decade has grown into a regional behemoth, dominating the local hospital scene.

A compensation committee annually reviews Romoff's performance on a variety of measures, from quality of care to financial performance, Cindrich said. The health system tries to pay Romoff on a scale with CEOs of similarly sized nonprofits, Cindrich said, but less than that paid to executives employed by comparable for-profit organizations.

"Mr. Romoff's compensation is in line with that paid to leaders in the markets in which UPMC competes for executive talent," he said. "According to the IRS [forms], other health-care executives in the area earn between $500,000 and $1 million for overseeing organizations that are less than one-fifth the size of UPMC and not as diverse."

Two of those executives -- Ronald L. Violi of Children's Hospital and Irma E. Goertzen of Magee-Womens Hospital -- each made more than $600,000 in fiscal 2004. Goertzen retired as Magee's chief executive that year, while Violi stepped down as Children's CEO in fiscal 2005. Both hospitals are part of UPMC.

Two other UPMC chiefs made more than a half-million dollars in compensation and benefits during fiscal 2004. Elizabeth Concordia of UPMC Presbyterian Shadyside earned $670,628, while David T. Martin of UPMC St. Margaret earned $501,157.

Gregg G. Zoller left as chief executive at Mercy Hospital during calendar year 2003 and took with him $840,803 in compensation and benefits. Mercy, which reports financial information to the IRS on a calendar year basis, also paid Zoller $630,000 in severance.

According to Modern Healthcare's survey, average CEO pay at hospitals with net revenue greater than $200 million ranged from $389,300 to $453,500 in 2004. At smaller hospitals, the average CEO pay ranged from $283,600 to $308,000.

By that standard, Violi, Concordia and Zoller all earned above-average salaries running hospitals with more than $200 million in net patient revenue as calculated by the Pennsylvania Health Care Cost Containment Council. Goertzen and Martin earned above-average salaries at hospitals with less than $200 million in net patient revenue.

But Linda Ross, the spokeswoman for Mercy, said of Zoller's compensation: "Health care is an extremely challenging and competitive industry. We pay our CEO a salary that is both commensurate with professional experience and comparable to what others in similar positions are paid in this market."

Of the UPMC executives, Cindrich said: "The amount of compensation paid to the executives responsible for the operation of each of UPMC's hospitals depends on a variety of factors unique to each situation, including, but not limited to the size and complexity of the hospital, its annual volume, competitive conditions existing at the time of the executive recruitment and meeting or exceeding long- and short-term performance goals."

Rounding out the half-a-million club is Jerry J. Fedele, who became chief executive officer of West Penn Allegheny Health System in fiscal 2004 and earned $581,791 in compensation, benefits and expenses. While that figure placed Fedele below the Modern Healthcare average for chief executives at health systems with net revenue greater than $1 billion, he did not serve as CEO for the entire year.

Charles O'Brien, the CEO at West Penn Allegheny until October 2003, collected about $331,968 in compensation and benefits plus a vacation payout of $71,725. Fedele and O'Brien collected $269,460 and $432,076, respectively, from a deferred compensation plan at West Penn Allegheny that was terminated in fiscal 2004. O'Brien also began collecting on a $1.6 million severance package from the health system.

Add up all the different kinds of pay and O'Brien eventually will receive more than $2.4 million.

Are these salaries too high for the CEO of a nonprofit hospital or health system? Not necessarily, said Freundt, of Sullivan, Cotter and Associates.

Many nonprofits are large, complicated organizations, so appropriateness is determined not simply by the amount of pay but the nature of the organization, he said.

Recent efforts by the IRS are meant to make sure that boards of directors at hospitals have a process for determining fair compensation. Concerned about reports of high pay for nonprofit CEOs, the IRS in 2001 announced that it could impose financial penalties on nonprofit executives who receive -- and board members who approve -- compensation that's not in line with what chiefs at similar organizations make, Freundt said.

Nonprofits can shift the burden of proof in determining what is excessive pay to the IRS by showing they've made a systematic determination of what they should pay their CEO. That includes using data from outside sources such as Modern Healthcare, Freundt said.

The threat of financial penalties has been significant, Freundt said, because otherwise the IRS "couldn't get at this issue of excessive compensation other than rattling the sword of 'we'll revoke your tax exemption,' which they wouldn't do, as a practical matter."

The IRS took the effort a step further last August when it announced a program to ask 2,000 nonprofit groups to document how they determine executive compensation. The agency's program includes a focus on CEOs who make more than $1 million.

An IRS spokesman said results from the survey are scheduled to be released this fall.

The Senate Finance Committee has held a series of hearings in the last year to probe governance practices at nonprofits. In June, the committee's chairman, Sen. Charles Grassley, R-Iowa, welcomed a series of recommendations to boost transparency and accountability in nonprofit governance from a group called the Panel on the Nonprofit Sector.

On executive compensation, the advisory group suggested that nonprofits could report CEO pay in the same format used by publicly traded companies.

The consumer group, Allegheny County ACORN, held a meeting Thursday on the North Side that brought together patients, hospital executives and political leaders to discuss the problem of unpaid medical bills. Word of above-average salaries at area hospitals is galling at a time when patients here are flirting with personal bankruptcy due to medical debt, said Maryellen Hayden, head organizer for the group.