Hospital district voters have a say in executive compensation

The roots of Measure M can be traced to last Feb. 8.

That was the day members of the Service Employees International Union-United Healthcare Workers West (SEIU-UHW) kicked off a signature-gathering campaign asking district voters to support an initiative limiting hospital executive compensation to no more than double the annual salary of California Gov. Jerry Brown. The effort came after the hospital board of directors declared an impasse in negotiations with SEIU in November 2011.

The initiative became a ballot measure after the union gathered approximately 13,000 district residents’ signatures, certified by the Santa Clara County Registrar of Voters in April. Faced with the choice of adopting the initiative or placing it before voters, the district board voted unanimously to put it to a vote Nov. 6.

As of Dec. 3, Brown’s salary will be $165,288 – thereby placing a cap on hospital executive compensation at $330,576, if the measure passes by a simple majority vote.

Measure support

Supporters of the measure include Kary Lynch, longtime El Camino Hospital employee and SEIU-UHW member, who said the measure aims to limit what he believes are excessive hospital salaries.

Lynch pointed to Santa Clara Valley Medical Center, which paid recently departed CEO Linda Smith an annual salary of $284,867 in 2010. El Camino Hospital President and CEO Tomi Ryba has a base salary of $695,000.

By limiting salaries, Lynch added, more money could flow to the hospital’s general fund, resulting in improved health care for the community.

In addition, Lynch said he supports the measure because he believes the hospital is mismanaging district taxpayer dollars. He pointed to a 2010-2011 Santa Clara County Civil Grand Jury report that concluded, among other things, that district and hospital monies were intermingled “to the extent that one cannot delineate how taxpayer contributions are spent.”

“Part of that mismanagement is paying excessive salaries and bonuses to executives,” Lynch said.

Lynch said the measure is not the result of contentious contract negotiations, which began in April 2011 and ended in September when hospital and union officials announced a new three-year agreement.

SEIU officials did not return a Town Crier email seeking clarity on the status of any organized SEIU support of the measure before the press deadline.

Other listed supporters of Measure M include former state Assemblywoman Sally Lieber, local Pastor Deborah Weatherspoon, Certified Nursing Assistant Laura Huston and Sunnyvale Mayor Anthony Spitaleri, a retired fire captain.

The argument against M

Measure M opponents, however, say arguments in favor of it are misleading.

David Reeder, former Los Altos City Councilman and current hospital board member, noted that the hospital receives approximately $9 million in taxpayer funds annually and spends approximately $6 million to fund community health initiatives for economically challenged district residents.

The remainder, he noted, is used to pay down bond obligations and for hospital capital improvements.

“It’s really important for residents to understand that the district doesn’t use any tax dollars to pay for salaries,” said Reeder, who added that income from hospital operations pays salaries.

Reeder noted that the hospital has a board policy of paying executives at the 50th percentile of market rate and regularly conducts independent hospital salary surveys. A salary cap, he added, would limit the hospital’s ability to attract and retain qualified executives.

“If we’re paying significantly less than the market rate for CEO and executive talent, it will have an impact on the quality of care we provide,” said Reeder, pointing to the added uncertainties of the implementation of the Affordable Care Act. “We need leaders who can move us through.”

Those against the measure argue that approving it “sets a bad precedent, asking voters to micromanage operations and reduce the authority” of the district board. An impartial analysis by the Santa Clara County Counsel added that there “is a legal question whether a hospital district is subject to a voter-approved initiative.”

Other opponents to the measure include the Los Altos and Sunnyvale city councils, the Los Altos Chamber of Commerce and former Los Altos mayors Bob Grimm and King Lear.

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