Garrick Taylor, state chamber spokesman
PHOENIX — Arizona voters likely will be asked to cap what hospital executives can be paid, because of a spat between a California-based union and hospital chains.
Petitions containing 281,087 signatures were submitted Thursday to the Arizona Secretary of State’s Office for a ballot measure to limit the total compensation for any hospital executive, manager or administrator to no more than what the president of the United States is paid. That is currently $450,000 a year.
Only 150,642 signatures need to be determined as valid to put the issue on the November ballot.
Hospitals that do not comply could lose their state licenses. They would be subject to prosecution under state consumer fraud lawsuits.
The proposal drew an immediate and vociferous reaction from the Arizona Hospital and Healthcare Association, which said approval of the measure would “harm healthcare and hurt patients.”
Pressed for specifics, spokesman Matthew Benson said there’s a link between what hospital executives are paid and the care the institutions can provide.
“If we’re going to have outside interests setting arbitrary caps on what hospital leaders and executives can be paid, it’s going to hamper the ability of these hospitals to recruit the best people,” he said.
Benson acknowledged the initiative specifically exempts medical or health care professionals “whose primary duties are the direct provision of medical services, research, direct patient care, or other non-managerial, non-executive, and non-administrative services.” But he said having the right people at the top also matters.
“We’re talking about the salary of the people who are leading these institutions, who are determining how they grow and whether they’re successful or not,” Benson said.
Steve Trossman, spokesman for the Service Employees International Union union, which crafted the measure, derided that contention.
“I don’t think patients die because an executive doesn’t move paper across their desk enough,” said Trossman, who is with SEIU-United Healthcare Workers West. He said some hospital CEOs make double or triple what is paid to skilled surgeons.
“Those are the people who save lives,” he said.
The Arizona Chamber of Commerce weighed in against the measure, saying it “would collapse Arizona’s healthcare industry and dramatically harm other sectors of our economy.”
That statement came just hours after the chamber blasted a separate initiative filed Thursday to set the state minimum wage by 2020 at $12 an hour, a figure that translates out to $24,960 a year.
Chamber spokesman Garrick Taylor said he sees no conflict between opposing a higher minimum wage while trying to derail something that would cap hospital executives’ salary at $216 an hour.
“We don’t like policies that keep people out of the labor market or that harm employers’ ability to attract talent,” he said.
The fight originated in California where the SEIU proposed a similar measure in 2014. The union backed off, however, after reaching a deal with the California Hospital Association to negotiate over issues, including hospital compensation.
When that effort failed, the union refiled the measure in California. But it was withdrawn from the ballot last month after a judge there ruled that the initiative violated terms of that 2014 agreement.
The Arizona version was filed in February.
Trossman said most hospitals are organized as not-for-profit operations, giving them tax exemptions. More than half of the dollars hospitals get come from the public coffers through programs like Medicaid and Medicare, he added.
Most Arizonans would be alarmed if they knew how much money some executives were collecting, Trossman said.
Nonprofits have to file forms with the Internal Revenue Service listing the salaries of top executives. But Trossman said these are usually two years out of date. Still, some information can be gleaned.
For example, the 2013 IRS form for Banner Health, which has hospitals n the Phoenix and Tucson areas, shows that Peter Fine, the chief executive, had total wages of $3.46 million, not including another $2 million in other compensation. Four other executives were listed as making more than $1 million each.
A request for comment from Banner Health went unanswered.
The John C. Lincoln hospital chain, which became HonorHealth, listed two executives at more than $1 million.
Trossman said his group found nine other hospital executives paid more than $1 million.
The most recent reports from the Secretary of State’s Office show the union had spent $537,250 by the end of May to put the issue on the ballot.