Labor Union Agrees To Drop Voter Initiative To Cap Hospital CEO Pay

A ballot initiative that would have capped what not-for-profit hospitals in California could pay its executives was officially shelved by its sponsor in lieu of a closer alliance with the state's leading hospital lobby.

The Service Employees International Union-Healthcare Workers West had been gathering signatures for the initiative to place it on November's ballot. It would have capped hospital executive pay at $475,000 a year. That's significantly higher than the average base compensation for hospital executives in California, which is more than $500,000 per year, and approaches $750,000 when bonuses and other additional pay is factored in.

The union had sponsored a successful 2012 ballot initiative to place salary caps on executives with the district-owned El Camino Hospital in the Bay Area. But SEIU-UHW President Dave Regan said an alliance with the California Hospital Association made more sense in a time of dwindling union membership, and that it would provide more job security for his union's 150,000 members, of whom about 60% are in California.

Regan refused to say how the initiative had been polling with voters, but sources suggested internal polling data available to both the union and the CHA suggested it would have passed. The CHA was prepared to fight it the initiative in court if it was implemented by voters.

“It's moot now,” Regan said.

The SEIU-UHW also agreed to drop another initiative that would have capped hospital charges at 25% above the cost of delivering the care.

It's not the first time both sides have tried to make amends after the union sponsored ballot initiatives. In 2012, the SEIU-UHW agreed to drop a pricing initiative similar to the one it was pushing this year, and another that would have required hospitals to spend a minimum of 5% of its revenues on charity care after the CHA agreed to lend a hand in the union's organizing efforts.

The pact includes establishing a $100 million “joint advocacy fund” that would be used to lobby for increases in Medi-Cal payments. California's providers currently receive the second-lowest payments in the nation.

This will be accomplished by identifying new resources and financing approaches at the federal and state levels, including educational activities, legislative and regulatory efforts, a ballot initiative, or other strategies,” a statement issued by the CHA and union said.

A recording of a conference call between Regan and his staff said that the SEIU-UHW would contribute $20 million to the fund, with the CHA providing $80 million. The SEIU-UHW would also be allowed to make organizing entreaties to 30,000 non-union hospital employees immediately. If improved funding for Medi-Cal is secured, the union would have a six-month window starting in November 2016 to organize another 30,000 employees at hospitals.

CHA President C. Duane Dauner also said the two sides would engage in greater efforts regarding the pricing and affordability of healthcare to California's consumers. However, he bristled when reminded of the CHA's past attempts to block or criticize price transparency initiatives.

In 2008, the CHA lined up against a bill that would have eliminated the use of “gag clauses” that keep pricing arrangements between health plans and hospitals confidential. And the CHA was also critical of the federal government’s decision last year to release Medicare pricing and payment data for individual hospitals, saying it might confuse the public.