Should Hospital CEOs Make More than America's President?
(CBS NEWS) Hospital executives in Arizona may have to learn to live on what the person running America earns, should voters approve a ballot initiative in the Copper State in November.
The measure, backed by the Service Employees International Union-United Healthcare Workers West (SEIU-UHW), would cap total pay for executives, administrators and managers of health care facilities to an annual salary equivalent to that of the U.S. president, a position that currently pays $450,000.
If enacted, the proposal would conceivably mean a stiff cut in pay for hospital executives, who seven years ago were making an average of $600,000 at nonprofit facilities across the U.S., according to a study published in the Journal of the American Medical Association.
Calling the compensation "inconsistent with the provision of high-quality, affordable medical care," the proposed Arizona amendment argues that executive pay diverts funds that could otherwise be used to "expand access to affordable medical care for all Arizonans."
The Arizona Chamber of Commerce and Industry is waging a legal effort to keep the measure off the ballot, arguing that the more than 281,000 signatures gathered in its support came before a properly formed campaign committee.
The chamber did not return requests for comment. But Glenn Hamer, its president and CEO, argued in a statement that "capping compensation prevents Arizona industries from being able to compete for and retain top talent."
The pay-cap effort coincides with others aimed at raising the minimum wage, with proposals on the November ballot in six states. "The members of our union are committed to economic equality. It's about raising the bottom for low-wage workers and also about limiting the top," said Sean Wherley, an SEIU-UHW spokesperson.
The initiative isn't the first attempt to limit the pay of hospital CEOs. A similar effort was derailed in California this year after an arbitrator found the labor group had violated a 2014 agreement with the California Hospitals Association not to file any ballot initiatives "adverse" to hospitals.
Massachusetts hospitals get millions in tax dollars from taxpayer-funded programs including Medicare and Medicaid, yet the executives running the medical centers aren't held accountable when services are cut, said David Schildmeier, a spokesperson for The Massachusetts Nurses Association, which two years ago initiated a ballot measure that would have fined hospitals paying top executives more than 100 times the earnings of the lowest-paid worker.
"A CEO in a community hospital serving 100 people probably makes $600,000," Schildmeier said. "A lot of these guys keep getting rewarded for a doing a bad job."
The union wound up pulling the referendum in a compromise that had state lawmakers agreeing to set safe patient limits for nurses in all hospital intensive care units.
That said, the effort is likely to be revived, said Schildmeier of the proposal, which would have required hospitals receiving tax dollars to disclose how large their profit margins are, how much money they hold in offshore accounts and how much compensation they pay their CEOs.
The effort quickly garnered over 100,000 signatures during the 2014 petition drive. "We had nurses out in front of shopping centers, and all you had to mention was hospital profits, and people would sign right away," Schildmeier said. "There's disconnect between what people make and the care they get."