Massachusetts Nurses Propose Hospital Profit, CEO Pay Penalties

The Massachusetts Nurses Association and National Nurses United have gathered hundreds of thousands of signatures in support of a ballot measure that would penalize hospitals in the state for excessive profits and CEO compensation.

The ballot initiative, the Hospital Profit Transparency and Fairness Act, centers on four main provisions:

•    If a hospital posts an annual operating margin (including amortization and depreciation) that exceeds 8 percent, it will be subject to a civil penalty equal to the amount the operating margin exceeds 8 percent. This would apply to all hospitals that accept Medicaid funds from Massachusetts and have a payer mix of less than 60 percent government payers.

•    If a hospital receives funds from taxpayer-funded insurers like Medicare and Medicaid, it will have to disclose all financial assets. This includes assets held in offshore accounts.

•    If a hospital that receives funds from taxpayer-funded insurers pays its CEO more than 100 times the amount of the lowest-paid full-time employee of that hospital in a given year, it will be fined equal to the amount the CEO's compensation exceeds 100 percent of the lowest-paid FTE.

•    The state would create a Medicaid reimbursement enhancement fund. All penalties from excessive CEO compensation and profits would go into the MREF, which would distribute extra reimbursement to hospitals that treat higher proportions of Medicaid patients.

The MNA/NNU also garnered support for another ballot initiative that would set a maximum limit on how many patients could be assigned to a nurse at one time.

The nurses union said the measures would provide more equitable, safer care in a Massachusetts market that is increasingly become more consolidated.

"We have created a healthcare system of haves and have-nots in Massachusetts, a system of winners and losers, where the mega healthcare corporations are the winners and too many patients and too many communities are the losers," said Julie Pinkham, RN, executive director of the MNA/NNU, in a news release. "The public has a right to know how and where their healthcare dollars are being invested. Particularly at a time when hospitals are using the current financial climate as an excuse to degrade or limit the care they are providing to vulnerable patients."

Lynn Nicholas, president and CEO of the Massachusetts Hospital Association, issued a statement on each proposed ballot initiative. Regarding penalties for high profit margins and CEO pay, she said:

"Massachusetts hospitals are already subject to extensive regulation, and they report extensive information to the state and federal government regarding both financial and clinical information. Hospitals fully support such public transparency and embrace being held publicly accountable for the healthcare services they provide to patients and their communities. However, virtually all hospitals in Massachusetts are non-government institutions that should not have the state dictate their operating margins and compensation. This is particularly true when state government pays hospitals substantially less than the cost of providing care to patients enrolled in government healthcare programs such as Medicaid. So hospitals, as a matter of both sound public policy and principle, oppose the proposed ballot initiative empowering government to set arbitrary limits on hospital operating margins and compensation."

Ms. Nicholas on mandated nurse staffing ratios: "Massachusetts hospitals' core objection to mandated nurse staffing ratios is that patient care is best determined by the care-giving team at the bedside, not by a government-set fixed formula. Patient care staffing decisions should always be based on the best interest of the patient — not a number. Nurses don't treat numbers, they treat people. Hospitals shouldn't be required to staff by numbers, either."

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