Modern Healthcare

Bill targeting Kaiser executive compensati­on disclosure moves forward

- —Alex Kacik

California’s Senate Judiciary Committee passed a bill last week that aims to boost public disclosure requiremen­ts for deferred compensati­on of executives at not-for-profit health systems.

AB 1404, drafted by Democratic California Assembly member Miguel Santiago, would close an alleged loophole that allows not-for-profit systems to hide deferred compensati­on when not-for-profit entities are used to provide a supplement­al retirement plan to employees who work for a for-profit arm of the company. The bill would require organizati­ons to tell the secretary of state the total amount of deferred compensati­on allocated by the not-for-profit entity every year, the name and title of each individual, whether taxes were paid on the deferred compensati­on, and the agreement or legal document governing the deferred compensati­on.

Santiago and the SEIU-United Healthcare Workers West union specifical­ly called out Kaiser Permanente, alleging that its for-profit medical group does not take “financial responsibi­lity for its $7.7 billion supplement­al retirement plan,” instead passing it off to the not-forprofit wing of the integrated delivery system.

Kaiser said in a statement that the union’s claims are “flat out wrong” and it is “misusing the legislativ­e process to try to influence contract bargaining.”

“The retirement plan for physicians of the Southern California Permanente Medical Group is the only retirement plan for about 11,000 current and retired physicians, and is very similar to the retirement plan enjoyed by the employees of Kaiser Permanente, including the 24,981 who are represente­d by SEIU-UHW in Southern California,” the company said. “The only significan­t difference is that the physician retirement plan is not trust-funded.”

A recent Modern Healthcare analysis found that the 25 highest-paid not-for-profit health system executives received a combined 33.2% increase in total compensati­on in 2017, rising to $197.9 million from $148.6 million in 2016. Two Kaiser executives made that list.

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