YRMC CEO: Pay cap for hospital execs would be hindrance
The president and chief executive officer of Yuma Regional Medical Center, Dr. Robert Trenschel, was in agreement with the Arizona Hospital and Healthcare Association’s stance that a recent ballot measure to cap what hospital executives can be paid would create a hindrance for the institutions.
Petitions with 281,087 signatures were submitted to the Arizona Secretary of State’s Office Thursday for a ballot measure to restrict the total compensation for any hospital executive, manager or administrator to be no higher than what the president of the United states is paid, which is presently $450,000 a year.
It is possible that Arizona voters will be asked to limit what hospital executives can be paid as 150,642 signatures need to be determined as valid to put the issue on the November ballot.
If the cap were to be in effect, hospitals that disregard the restriction could lose their state licenses and be subject to prosecution under state consumer fraud and lawsuits.
The measure was constructed by the Service Employees International Union (SEUI) and a similar measure was proposed by the union in California in 2014.
At that time, the union stepped back from the proposal after reaching a deal with the California Hospital Association to negotiate over issues, including hospital compensation.
Following that, the union refiled the measure in California. However, it was
withdrawn from the ballot last month after a judge ruled that the initiative violated the terms of that 2014 agreement.
The measure for Arizona was filed in February, prompting the Arizona and Healthcare Association to say that approval of the measure would be harmful to healthcare and patients.
“I’m for the Arizona Hospital and Healthcare Association’s stance that it would hinder attracting the best talent,” Trenschel said.“It needs to be recognized, too, that we are a nonprofit entity, so we do conduct ourselves toward community resources and as such basically, we at
YRMC and other nonprofits do the same thing, or at least other nonprofit healthcare organizations conduct what they call a fair market assessment.”
“Basically, anytime you have an employee, whether it’s a CEO or whether it’s a transporter, we conduct surveys that are either based on executive compensation or staff compensation, or even physician compensation falls into the same bucket,” Trenschel explained. “And you do a fair market assessment. Fair market assessments are based on geographic region, scope, responsibilities, size of the organization.”
Essentially, Trenschel says the fair market assessment keeps organizations in a pay range to prevent
or inhibit large swings one way or the other for individuals.
“The fair market value piece is kind of what keeps things in check at least for a nonprofit organization like us,” Trenschel noted.
Much of the current concern arose when the union found how much money certain executives were making, which has been shown to be in the millions.
A spokesperson with SEUI had raised the issue that executives’ current earnings are double or triple what is paid to skilled surgeons.
“If you employ a position you are going to employ that position using the same type of assessment in that fair market value assessment,” Trenchel said. “A physician that’s in their
own private practice isn’t subject to that, they are basically an independent business that can make as much as they want based on how much they want to work. They may elect to do a lot, they may elect to do a little, it’s somewhat like a private business, and in medical groups it would be the same thing. It’s really a free market.”
Nonprofits are required to file forms with the Internal Revenue Service listing the salaries of top executives.The most current IRS form listed for YRMC on www.propublica. org is for 2013, a time when Patrick Walz was the CEO at YRMC. The form shows that Walz had total wages of a little over $534,000 and a little over $42,000 in other compensation.