Labor Union Pushes For Hospital CEO Pay Cap
The SEIU-United Healthcare Workers West is pushing to have an initiative put before California voters later this year to cap non-profit hospital CEO compensation and benefits at $450,000 a year.
The SEIU-UHW said last week it had submitted to the California Secretary of State's office more than 600,000 signatures to qualify the Hospital Executive Compensation Act of 2016 for the November ballot. State officials have until early July to decide whether to place the initiative in front of voters.
The cap is far below the average compensation paid to non-profit hospital CEOs in California. The average compensation was about $800,000 in 2013, according to a survey conducted by Payers & Providers last year. Dozens of hospital and healthcare system executives – including many who are not CEOs – earn well over $1 million annually.
According to a statement on the SEIU-UHW website, “Over the past 10 years, hospital executive pay has more than doubled. In some hospitals, you could afford to hire 100 nurses for the price of just one of these multi-million dollar CEOs. Does that sound right to you? It doesn’t to us. So we did something about it.”
The SEIU-UHW, which represents about 85,000 healthcare workers statewide, has pushed for ballot initiatives in the past capping CEO pay. Such an initiative was narrowly passed by voters in 2012 to cap pay at the El Camino Healthcare District in Mountain View, although it was later defeated in court.
However, the labor union also uses such initiatives as leverage in contract negotiations with hospitals, often withdrawing them after receiving desired concessions. In 2014, the SEIU-UHW withdrew a statewide initiative to cap hospital pay at $450,000 after hospital leaders and lobbies suggested they would open up negotiations with a rival union. The two sides agreed to jointly pursue higher payments from the federal government for Medi-Cal patients in lieu of withdrawing the initiative.
In a statement issued late last year, the California Hospital Association said the SEIU-UHW's decision to pursue a new ballot initiative violated the 2014 agreement and was an abuse of the state's initiative process. “Artificially imposing a cap on compensation will result in a loss of qualified executives and undermine the ability of hospitals to meet the challenges ahead,” CHA Chief Executive Officer C. Duane Dauner said at the time.
The $450,000 cap is tied to the salary paid to the President of the United States. Since 2001, U.S. presidents receive a $400,000 salary and another $50,000 annual stipend to defray expenses. However, the presidential salary's purchasing power has declined over the years. A century ago, the president's salary was $75,000 – the equivalent of $1.6 million today.
