Legislative panel gives tepid reception to limiting hospital executive salaries

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.

smistler@sunjournal.com

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Comments

 's picture

$70,000?!

You want someone with a Master's or PhD in hospital administration to accept a job for $70,000?! A hard working RN makes more than that year, never mind what the other professional staff make? Mr. Buldoc, while I'm not a fan of huge salaries, but a little reality needs to shine in your life. And having known personally a hospital president, it is a 24/7/365 job, married to your job, never away from the phone. Certainly not a job I would want for a long time, especially at $70k a year. I know it's difficult while being in Augusta but try real hard to get that dose of reality into your life, maybe ever a daily dose. One quick question Mr. Bolduc: did you object to the many "special assistants" in Augusta that made >$100,000 in the last 8 years?

How about...

How about I find out how much you make, then suggest that you can live on half of what you make? If any company that receives a shred of tax money is subject to legislative caps on salaries, would that explain why the government is trying to spread it's stimulus money to as many businesses and states as they can? More government, more control...

Greg Rose's picture

Brian Bolduc gets it!!! A Law Maker with Common Sense!

Here's to Rep. Bolduc! Isn't it amazing Mr. Bolduc's bill has no co-sponsors and met with a less than welcoming reception in the legislature? I too was outraged when the SunJournal article highlighting health care executives salaries was published. Any organization which accepts taxpayer money should have some accountability to taxpayers.
I am sure Governor LePage's head of DHHS (former head of the Maine Hospital Association read: LOBBYING GROUP) alerted her cohorts the moment even a rumor of this bill made it's way around Augusta.
The health care system in Maine and in the US is broken. What is it that a hospital executive does to EARN such an exorbitant salary? Could these people not live very comfortably on HALF of what they currently make? Redirect the "excess" to provide care for the uninsured. That would show me a commitment to caring for the people of maine (I'm assuming that this IS the mission of all hospitals in the state.) versus a commitment to lining their own pockets.

 's picture

Salary Caps

I don't agree in principle with salary caps. Salaries should be set by the market. But often they aren't in the case of CEO's. Captive boards often rubberstamp excessive salaries for CEO's because the CEO's can grant them many bnenefits. Hospitals and Schools often have great political power because they are major employers. The controls are not working. So while the bill is bad, it points to a serious problem that needs addressing.

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