Blue Cross Severance Raises Questions Of Nonprofit Pay

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For the past several days, there's been growing public outrage about the $11.3 million severance package paid to Cleve Killingsworth, the former CEO of Blue Cross Blue Shield of Massachusetts.

“The entire Board understands the outrage and concern,” BCBS Board of Directors member Paul Guzzi said today in an interview on Radio Boston.

Some of the outrage (including today from Boston Mayor Thomas Menino) has focused on the fact that the Board of Directors receive salaries – a practice that today the Board announced it was halting.

“Today the Board unanimously voted to suspend indefinitely compensation for members of the Board,” Paul Guzzi said. “And I think that’s important. Second, the company has voluntarily been cooperating and will cooperate with the Attorney General as their office reviews both the Cleve Killingsworth contract and reviews the entire status really of what is a $13 billion operation that is Blue Cross Blue Shield.”

Killingsworth resigned a year ago after BCBS recorded huge back-to-back operating losses.

On Radio Boston, Ethan Rome, executive director of Health Care for America Now, questioned how the contract had ever been approved then.

"Under what circumstance in 2005 does this make sense?" Rome asked.

Guzzi said Killingsworth contract was from a different "era," and noted that the current BCBS CEO, Andrew Dreyfus, has a contract that is "considerably below" Killingsworth's.

“The contract was entered into on the basis of outside compensation experts assessing the market back then – 2005,” Paul Guzzi said. “Clearly things have changed since then and it was and is an enforceable contract, but that’s something that the Attorney General will be reviewing.”


  • Paul Guzzi, member of Blue Cross Blue Shield Board of Directors
  • Ethan Rome, executive director of Health Care for America Now
  • Regina Herzlinger, professor of Business Administration, Harvard Business School

This segment aired on March 8, 2011.


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