Saving Medicaid $213 Million by Capping Hospital Salaries, Not Patients’ Rights

Center for Justice & Democracy 90 Broad Street, Suite 401 New York, NY 10004 Tel: 212.267.2801 [email protected] http://centerjd.org SAVING MEDICAID $213 MILLION BY CAPPING HOSPITAL SALARIES, NOT PATIENTS’ RIGHTS March 22, 2011 On January 5, 2011, Governor Andrew M. Cuomo established a Medicaid Redesign Team (MRT) to provide the Governor with Medicaid reform “findings and recommendations for consideration in the budget process of New York State Fiscal Year 2011-12.”1 This Team was dominated by hospital and industry lobbyists, with consumer or patient advocates mostly excluded. Among the original 274 ideas distributed to MRT on February 9, 2011,2 was proposal 261, which would have limited multi-million dollar hospital executive salaries. The proposal was killed for reasons that remain unclear, although perhaps not surprising given the make-up of the Medicaid Redesign Team. In a March 25, 2011 article about multi-million dollar hospital CEO salaries, New York Times reporter Jim Dwyer wrote: A proposal to allow public financing for only the first $1 million in wages for an executive died before it even reached the task force. “It was classic how it was killed,” said Judy Wessler, director of the Commission on the Public’s Health System, an advocacy group that had suggested the limits. “We submitted the proposal in writing, met with the state staff members about it, then testified for our two minutes at a hearing,” Ms. Wessler said. “Then in the written summary of all the 4,000 proposals, they twisted the wording of ours so that it would be impossible to implement. Then they said it was not viable, so it wasn’t even put up for a vote.” State officials acknowledged that the proposal had been drastically changed from its original meaning, but did not explain how that happened. In an e-mail exchange provided by Ms. Wessler, Jason A. Helgerson, the state’s Medicaid director, apologized “for not having had the time to do all we wish to do.” Mr. Helgerson was not available for an interview on Tuesday, a spokeswoman said. As the paper also reported, Assemblywoman Deborah Glick has introduced legislation to “limit total compensation of hospital executives whose facilities receive public funds to $250,000 a year.” The $250,000 figure is a critical point of comparison. It is the amount that the MRT, under Proposal 131, proposed as an absolute, one-size-fits-all cap on “non-economic” damages for medical malpractice victims, including brain-damaged children. Unlike proposal 261, this Draconian and much criticized3 compensation cap, as well as a birth injury fund, did make it through the MRT process and is now in the Governor’s budget. To explain what this means, non-economic damages compensate an injured patient for physical pain and suffering – 1 Executive Order No. 5, http://www.governor.ny.gov/executiveorder/5. 2 http://www.health.state.ny.us/health_care/medicaid/redesign/docs/2011-02-24_status_of_original_ideas.pdf 3 See, e.g., Editorial, “Medicaid and the N.Y. Budget: A Bad Deal on Malpractice,” New York Times, March 12, 2011. sometimes for a lifetime – but also for the loss of the ability to enjoy life or to interact on equal terms with all people, to engage in customary activities as a whole person, or generally the inability to lead a normal life due to the injuries suffered. (Note that there is no proposal to cap compensation for medical care. However, those funds are not really the victims’ anyway. These damages go right back into the health care system so that the only people who are fully compensated under this plan are members of the medical industry, the very industry that caused patient injuries in the first place.) The MRT “scored” savings from these medical malpractice limits at a very high number of $208 million. No one outside of the medical industry knows how this figure was determined. As the consumer groups have noted, it was arrived at based on private industry data with no independent verification or analysis, and no publicly-released government information to support it. In fact, history is clear that capping medical malpractice awards does not lead to lower premiums for doctors or hospitals because what drives rate hikes is not the state’s “tort” law.4 What’s more, the Times Union noted in a recent editorial that to pay for one of the medical malpractice proposals – a roughly $170 million brain-damaged baby fund - there would be “a 0.3 percent surcharge on hospital revenue plus another 4 percent on obstetrical cases. Disingenuously termed a ‘quality contribution,’ it would undoubtedly be passed on to consumers, either directly through hospital bills or indirectly through insurance premiums.”5 Taking the MRT and the Governor at their word for purposes of this analysis, the question becomes whether there are ways to find money for Medicaid that does not so drastically harm profoundly injured patients who got that way due to medical negligence. The answer is yes. In fact, not only could savings be found but the entire amount of projected savings from the medical malpractice proposals could be found and more simply by not overpaying hospital executives. Specifically, our analysis finds that if hospital executive salaries were capped at $250,000, hospitals would no longer need $213,376,378. If this amount - $213,376,378 - were deducted dollar for dollar from Medicaid payments to these hospitals, New York State would save more than the amount that the MRT claims would be saved through its very unfair medical malpractice measures. Analysis CJ&D conducted an extensive review of the most recent tax forms available for 153 non-profit New York State hospitals and hospital systems. We examined the most recent 990 IRS tax forms, the annual forms filed by all nonprofit corporations in the United States. For the most part, the most recent forms filed and publicly available at “www.guidestar.org” are for 2009. Occasionally, the most recent year filed and available is 2008. We specifically examined what each hospital reported as total compensation for its executives. This can be found on Page 7 of the 2009 990s, and Page 8 on 2008 990s. For purposes of this 4 See, Center for Justice & Democracy, “Caps Do Not Lower Insurance Premiums for Doctors,” March 2011, http://centerjd.org/archives/states/newyork/CapsDontWorkF.pdf 5 Editorial, “Back to the Operating Table,” Times Union, March 18, 2011. http://www.timesunion.com/opinion/article/Back-to-the-operating-table-1179475.php 2 analysis, we examined executives, officers, board members, trustees and other management with hospital-wide responsibility, whose compensation was in excess of $250,000. We conservatively excluded department directors or chairs. Where there was a network of hospitals or affiliate hospitals and compensation was duplicated on different 990s, we counted the executive’s compensation only once. We then determined the amount that each salary exceeded $250,000. As the following chart shows, based on this analysis CJ&D finds that of the 153 non-profit hospitals, 658 executives, officers, board members, trustees and other management with hospital-wide responsibility were paid in excess of $250,000. Adding together the excess of this compensation above $250,000 for each of these individuals totals $213,376,378. This is the amount - $213,376,378 million - that Medicaid could save by capping salaries at $250,000. Total Compensa‐ Amt above First Name Last Name Title Hospital tion 250k Linda Brady President and CEO Kingsbrook Jewish Medical Center $4,201,019 $3,951,019 Timothy McCormick President and CEO The Unity Hospital of Rochester $3,977,269 $3,727,269 Miguel Fuentes President and CEO Bronx Lebanon Hospital $3,602,997 $3,352,997 Trustee President and Herbert Pardes MD CEO New York Presbyterian $2,819,216 $2,569,216 President And Chief Kenneth Davis Executive Officer Mount Sinai Hospital $2,697,152 $2,447,152 Daniel Walsh Former CEO Winthrop University Hospital $2,602,099 $2,352,099 Leippziger Lyle Section Head Long Island Jewish Medical Center $2,509,076 $2,259,076 Michael Dowling President and CEO North Shore University Hospital $2,466,677 $2,216,677 Robert Grossman Ex Officio, Dean & CEO NYU Hospitals Center $2,443,422 $2,193,422 Robert Glickman Former Dean & CEO NYU Hospitals Center $2,416,118 $2,166,118 James Kaskie President and CEO Kaleida Health $2,324,621 $2,074,621 Executive VP & Chief Steven Corwin Operating Officer New York Presbyterian $2,246,442 $1,996,442 Chandra Sen, MD Board Member Long Island College Hospital $2,109,204 $1,859,204 Alan Guerci President and CEO St. Francis Hospital - LI $2,017,133 $1,767,133 Stanley Brezenoff CEO & Board Member St. Lukes Roosevelt Hospital $2,014,413 $1,764,413 Steven Safyer President and CEO Montefiore Medical Center $1,970,773 $1,720,773 John Federspiel President Hudson Valley Hospital Center $1,923,538 $1,673,538 David Rosen President, CEO Jamaica Hospital Medical Center $1,786,295 $1,536,295 Graver Michael Chief Long Island Jewish Medical Center $1,741,122 $1,491,122 Executive Vice Joel Perlman President – Finance Montefiore Medical Center $1,736,105 $1,486,105 Good Samaritan Hospital Medical William Allison President, and CEO Center $1,728,008 $1,478,008 Sheinerman Samuel Assoc Chairperson Long Island Jewish Medical Center $1,586,852 $1,336,852 Executive VP, CFO & Phyllis Lantos Treasurer New York Presbyterian $1,586,008 $1,336,008 3 Alan Hartman Chairperson North Shore University Hospital $1,574,692 $1,324,692 Executive VP and Chief Medina Memorial Health Care John Gunn Operating Officer System $1,574,655 $1,324,655 Group SVP, COO & Robert Kelly MD Chief Med Off New York Presbyterian $1,552,748 $1,302,748 Senior VP, Facilities Development & Real Louis Reuter Estate New York Presbyterian $1,531,547 $1,281,547 Sririm Iyer, MD Assoc Chair, Cardio Lenox Hill Hospital Center $1,494,711 $1,244,711 Executive Vice President, Robert Conaty Operations Montefiore Medical Center $1,452,952 $1,202,952 Mounir Doss Executive V.P.

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