AUGUSTA — Despite increasing calls for greater accountability and transparency from hospitals, a proposal that would limit health-executive compensation to the governor's annual salary got a lukewarm reaction from lawmakers Wednesday.
The bill, sponsored by Rep. Brian Bolduc, D-Auburn, would cap a hospital administrator's total compensation at $70,000. Bolduc said the impetus for his legislation came after reading a recent Sun Journal report that showed hospital executives were giving themselves pay increases and green-lighting large capital projects while laying off workers and hammering state lawmakers for unpaid Medicaid reimbursements.
During his testimony, Bolduc told the Health and Human Services Committee that his bill was designed to address one of the "many injustices present in our health care system."
"These so-called nonprofit hospitals, which are heavily subsidized by the federal, state and local government and taxpayers should not be doling out these shameless and astronomical salaries," he said. "It is an insult to every wage earner in the state."
The Maine Hospital Association, which represents the state's 39 hospitals, rejected Bolduc's bill, arguing that checks on administrative salaries were already in place by the Internal Revenue Service's "excess benefit" laws governing nonprofits.
Jeffrey Austin, the lobbyist for the MHA, said protections against exorbitant executive salaries exist at the state level as well. He cited the state attorney general's power to oversee and investigate the financial activities of public charities.
Austin also indicated Bolduc was using his position as a state legislator as a bully pulpit.
"It is good and right that elected officials use their position to shed light on any issue of concern," Austin said. "Elected officials also possess a truly awesome power, the power to enact laws that bind the actions of Maine citizens. ... We are hopeful that you will agree that not every topic about which you might have a strong feeling is appropriately addressed by enacting a statute."
Some committee members, including Sen. Margaret Craven, D-Androscoggin, indicated that Bolduc's bill might go too far.
"You have a lot of courage, and I thank you for bringing this bill forward," Craven said. "But I wonder if the Legislature has the power to dictate salaries for nonprofits."
Bolduc responded, "I honestly don't know if it can either. But there must be a way for the government to take a look at this."
Bolduc's proposal doesn't appear to have a lot of momentum. His bill has no co-sponsors.
However, some lawmakers said they were glad Bolduc was bringing the issue forward. Sen. Joe Brannigan, D-Portland, who is co-sponsoring a bill this session that would force hospitals to submit to the state's right-to-know law and open up board meetings, said hospital boards were "very secretive" despite receiving significant public subsidies.
"This ought to be a public issue," he said. "There are huge amounts of money here."
Ben Chin of the Maine People's Alliance, a progressive advocacy group, said Bolduc's bill may not be the best way to address executive salaries.
Chin also noted the Sun Journal report, which showed that between 2006 and 2008, the state's six largest hospitals paid their CEOs more than the national average of $490,000.
"We believe lowering the outrageous salaries of CEOs in Maine offers a clear, simple, immediate way to lower health care costs for patients," Chin said. "At the same time, we do believe that tying the salaries of hospital administrators to that of the governor does seem to be a little bit of apples and oranges."
Chin encouraged the committee to find an alternative to Bolduc's proposal that would reach the same outcome.
Bolduc's bill will undergo a work session sometime next week.