Former Beaumont CEO John Fox walks away with nearly $10.2 million in bonus, severance

John Fox, the Beaumont Health chief executive who engineered a tie-up with Spectrum Health, walked away from Beaumont's eight hospitals with nearly $10.2 million, including a $2.9 million bonus and $6.3 million severance.

He earned more than twice as much as Tina Freese Decker in 2022, who now oversees the combined health systems known as Corewell Health. Freese Decker, former CEO of Spectrum, earned $4.49 million that year.

The salary figures come from Corewell Health's annual report to the IRS for 2022. As a nonprofit, tax-exempt health system, Corewell is required to provide the government and interested parties with detailed information regarding executive compensation every year.

Fox's last day at Beaumont was Feb. 4, 2022, just days after the launch of the new system, which may explain why his base pay that year was just $160,697.

Fox did not immediately return a phone call seeking comment. According to his LinkedIn profile, he is retired.

Corewell Health now has 21 hospitals and more than 60,000 employees, the Free Press reported in November. The Spectrum-Beaumont deal also included Priority Health, an insurance plan with roughly 1.3 million members, according to the November report.

Allan Baumgarten, a Minneapolis-based health care analyst who publishes an annual report on hospitals and insurance companies in Michigan, called Fox's compensation a "very generous" golden parachute.

He said it also confirmed what many people suspected: that Fox sought a large reward for brokering a deal with another health system.

In a statement, Corewell spokesman Mark Geary said: "John Fox’s contract included an exit package negotiated with the legacy Beaumont Health Board of Directors. It is standard practice for CEOs to have an exit package as part of their employment agreement. He will not receive any additional compensation in the future."

Fox took over Beaumont in 2015, coming to Michigan from Emory Healthcare in Atlanta, and oversaw the merger of Beaumont's three hospitals in Royal Oak, Troy, and Grosse Pointe with Botsford Hospital in Farmington Hills and the four hospitals in the Oakwood Health System — Dearborn, Taylor, Trenton, and Wayne.

He first attempted to expand Beaumont in 2019 when he sought to acquire Summa Health of Akron, Ohio. That deal was called off the following year, in the midst of the global COVID-19 pandemic.

Fox was also in partnership discussions with Advocate Aurora Health of Illinois and Wisconsin, but that deal also fell apart in the fall of 2020. Former longtime board member Steve Howard said Beaumont's doctors and donors were vehemently opposed to the merger.

Advocate Aurora is now part of a health system with headquarters in Charlotte, North Carolina.

This is not the first time Fox's compensation has been controversial. Beaumont paid Fox a $2.6 million bonus in March 2020, on the same day it admitted its first COVID-19 patient, and around the time Fox warned that the hospital system would need a federal bailout due to the global pandemic. His bonus was part of a $6.75 million compensation package for 2019 ($1.6 million of that had been reported on prior returns).

Howard, the longtime member of the Beaumont board of directors who left in December 2021, said he was a very vocal opponent of Fox's compensation, arguing that $10 million was inappropriate compared with what other hospital systems of similar size paid their top executives.

During his tenure, Fox alienated doctors, nurses, and nursing staff, with key cardiologists and others fleeing Beaumont. Howard said Fox was not "physician friendly."

Fox is an accountant.

In his statement, Geary, the Corewell spokesman, said leading an organization like Corewell Health requires highly talented executive leadership.

"Like other organizations of our size and complexity, we must provide executive compensation and benefits that are reasonable and competitive to what employers in health care and other sectors provide," he said.

"Corewell Health uses a comprehensive, market-based approach to determine executive compensation. This includes national and regional research by a third-party consultant that reviews compensation and compares it to other health systems across the country and in Michigan," Geary said in the statement.

Howard said morale is better now and had suffered because of the pandemic and "the uproar around the John Fox era. ... People had to go through a healing process and regroup."

Howard called the deal with Spectrum a "merger of equals."

But Baumgarten, the Minnesota analyst, said that based on the composition of the Corewell board and executive staff, "this was a takeover in every sense of the word."

Nevertheless, he said Corewell will want its southeastern Michigan hospitals and doctors to be strong competitors in the health care market, especially as Henry Ford Health and Ascension Michigan have agreed to a partnership involving Ascension's southeast Michigan and Flint-area properties.

Baumgarten said Spectrum is respected as a "high-quality system and will want its successor organization to achieve the same measure of success."

Consolidation gives health care systems a larger market share, which, in turn, gives them more leverage to negotiate reimbursement rates with private insurers and to negotiate better prices for supplies.

But consolidation means fewer choices for consumers and possibly higher prices.

Consolidation aside, Howard, the former Beaumont board member, said hospital systems face a variety of headwinds: significant labor shortages; the shift of patients to outpatient facilities such as urgent care and surgical centers and staggering supply chain costs.

Contact Jennifer Dixon: jbdixon@freepress.com

This article originally appeared on Detroit Free Press: Ex-Beaumont CEO John Fox walks away with millions in bonus, severance