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Hospital CEOs paid millions while many workers furloughed

June 8, 2020

Topics: Quote of the Day

By Jessica Silver-Greenberg, Jesse Drucker and David Enrich
The New York Times, June 8, 2020

The New York Times analyzed tax and securities filings by 60 of the country’s largest hospital chains, which have received a total of more than $15 billion in emergency funds through the economic stimulus package in the federal CARES Act.

The hospitals — including publicly traded juggernauts like HCA and Tenet Healthcare, elite nonprofits like the Mayo Clinic, and regional chains with thousands of beds and billions in cash — are collectively sitting on tens of billions of dollars of cash reserves that are supposed to help them weather an unanticipated storm. They awarded their five highest-paid officials about $874 million in the most recent year for which they have disclosed their finances.

At least 36 of those hospital chains have laid off, furloughed or reduced the pay of employees as they try to save money during the pandemic.

Industry officials argue that furloughs and pay reductions allow hospitals to keep providing essential services at a time when the pandemic has gutted their revenue.

But more than a dozen workers at the wealthy hospitals said in interviews that their employers had put the heaviest financial burdens on front-line staff, including low-paid cafeteria workers, janitors and nursing assistants. They said pay cuts and furloughs made it even harder for members of the medical staff to do their jobs, forcing them to treat more patients in less time.

But the formulas to determine how much money hospitals receive were based largely on their revenue, not their financial needs. As a result, hospitals serving wealthier patients have received far more funding than those that treat low-income patients,.

One of the bailout’s goals was to avoid job losses in health care, said Zack Cooper, an associate professor of health policy and economics at Yale University who is a critic of the formulas used to determine the payouts. “However, when you see hospitals laying off or furloughing staff, it’s pretty good evidence the way they designed the policy is not optimal,” he added.

The for-profit hospital giant Tenet Healthcare, which has received $345 million in taxpayer assistance since April, has furloughed roughly 11,000 workers, citing the financial pressures from the pandemic. The company’s chief executive, Ron Rittenmeyer, told analysts in May that he would donate half of his salary for six months to a fund set up to assist those furloughed workers.

But Mr. Rittenmeyer’s salary last year was a small fraction of his $24 million pay package, which consists largely of stock options and bonuses, securities filings show. In total, he will wind up donating roughly $375,000 to the fund — equivalent to about 1.5 percent of his total pay last year.

The chief executive at HCA, Samuel Hazen, has donated two months of his salary to a fund to help HCA’s workers. Based on his pay last year, that donation would amount to about $237,000 — or less than 1 percent — of his $26 million compensation.

Apparently anticipating a strike, a unit of HCA recently created “a new line of business focused on staffing strike-related labor shortages,” according to an email that an HCA recruiter sent to nurses.

The email, reviewed by The Times, said nurses who joined the venture would earn more than they did in their current jobs: up to $980 per shift, plus a $150 “Show Up” bonus and a continental breakfast.



By Don McCanne, M.D.

Billions of dollars of taxpayer funds have been paid out to some of the nation’s largest and most successful hospital chains, supposedly to prevent job losses of health care workers, though tens of thousands have instead received pay cuts or have even been furloughed (1.4 million health care jobs lost in April – Bureau of Labor).

And the CEOs of these chains? Showing sympathy, the CEOs of industry giants Tenet and HCA have agreed to a reduction of about one percent of their incomes to assist their workers in these difficult times. It must be quite a hardship to get by on the remaining ninety-nine percent of their eight-digit incomes.

Further, HCA has created a new line of business focused on staffing strike-related labor shortages, promising nurses who join their new venture pay raises, bonuses, and even a continental breakfast. Nobody can say that these CEOs are heartless, at least not for the strike-breaking nurses who are willing to join them in their venture, if any such nurses even exist. All of the nurses I know advocate for their patients rather than for corporate CEOs and shareholders.

Another excerpt from today’s article probably reveals more about the cold, cold hearts of the HCA executives:

“Rosa Luna, who cleaned patient rooms at HCA’s hospital in Riverside, Calif., died of the virus; her colleagues had warned executives in emails that workers, especially those cleaning hospital rooms, weren’t provided proper masks. Around the time of Ms. Luna’s death, HCA executives delivered a warning to officials at the Service Employees International Union and National Nurses United, which represent many HCA employees. The company would lay off up to 10 percent of their members, unless the unionized workers amended their contracts to incorporate wage freezes and the elimination of company contributions to workers’ retirement plans, among other concessions.”

If the nurses agree to these reductions, will the executives agree to a ten percent reduction in their work force while forgoing their pensions and stock options and bonuses, along with making other concessions (oh no, not the corporate jet!)? Didn’t think so.

We are already spending $4 trillion on health care. That’s enough to take care of everyone through a well designed, single payer, improved Medicare for All. There are plenty of hospital administrators who believe in patient service, who will work for fair incomes, and who would be honored to be part of the Medicare for All team.

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About the Commentator, Don McCanne

Don McCanne is a retired family practitioner who dedicated the 2nd phase of his career to speaking and writing extensively on single payer and related issues. He served as Physicians for a National Health Program president in 2002 and 2003, then as Senior Health Policy Fellow. For two decades, Don wrote "Quote of the Day", a daily health policy update which inspired HJM.

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