In one of the largest ironies of the coronavirus pandemic, thousands of health-care workers across the country have had their wages cut and hours slashed as profitable elective procedures are put on hold. Hospital CEOs have called these measures “painful” and “difficult,” though necessary to make up for millions of dollars in lost revenue. But some executives don’t seem willing to share in the suffering.
Last month, executives at Denver Health received bonuses of up to $230,000, just days after asking hospital workers to reduce their hours or take time off. At the University of Kentucky—which boasts some of the highest-paid administrators in the country—the college president has refused to take a pay cut, despite furloughing 1,500 medical workers. And executives at McLaren Health Care in Michigan have agreed to cut their salaries by just 2 percent—an amount employees facing furloughs called “a slap in the face.”
“These people are making millions of dollars and they're going to give 2 percent back?” said Jeff Morawski, a registered nurse at McLaren Macomb. “I think it’s a joke. I think it’s a slap in the face... They’re not walking into the hospital every day as a frontline worker.”
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Hospital CEO salaries have been ballooning for years. According to a study published in Clinical Orthopaedics and Related Research, the average hospital CEO’s salary increased 93 percent in the decade between 2005 and 2015. In the same time frame, the average health-care worker’s salary increased just 8 percent. The average hospital CEO made $3.1 million dollars a year in 2015, according to the study. The average nurse, meanwhile, made $75,510.
At the University of Kentucky, which oversees the UK HealthCare system, President Eli Capilouto is the fourth highest-paid college president in the country. Capilouto made more than $1.5 million from base salary and other benefits in 2018, according to the Chronicle of Higher Education. Executive Vice President of Health Affairs Mark Newman was just behind him, with more than $1.4 million in yearly earnings. (The president of the nearby University of Louisville, for comparison, makes $875,000 a year.)
Amid the coronavirus crisis, the University of Kentucky is projecting a $70 million budget shortfall. And that doesn’t include lost revenue at UK hospitals and clinics, where outpatient visits are down 45 percent and inpatient visits are down 34 percent. Between the reduced patient volumes, additional spending on testing and protective gear, and estimated investment losses, UK HealthCare is projecting $160 million in losses due to COVID-19.
Hospitals around the country have seen a decline in revenue due to restrictions on elective procedures, which can generate up to 80 or 90 percent of some hospitals’ income. (Even in the epicenter of the pandemic, academic hospital systems in New York City have reported up to $450 million in losses.) Because of this, executives at some hospitals have agreed to reduce their salaries—or even forgo them completely—while the crisis persists.
But administrators at the University of Kentucky have agreed to no such cuts. Instead, Capilouto announced furloughs of 1,500 health-care workers and another 200 university staff last week. Some employees are being furloughed for as little as a week, others will not be paid for more than two months. The university is also temporarily suspending new hires, freezing merit raises, and cutting retirement contributions in half for the rest of the year.
“They’re asking for sacrifices from people least able to make them,” said Megan Parker, a Ph.D. candidate at UK, in a press release circulated by a group of frustrated university students, workers and community members. “Basically, we are supposed to accept that sacrifices have to be made, but they are expecting these sacrifices from people unable to make significant contributions.”
Zeke Perkins, a graduate instructor at the university, told The Daily Beast that more than 100 people had signed onto a letter calling for an end to the furloughs.
“We’ve been calling on the administration to provide for those who make the least and take cuts themselves,” Perkins said. “They could cut their salaries significantly and save hundreds of jobs.”
Of Capilouto, he added, “You could easily cut [his] salary in half, cut it down to $100,000 and he’s still fine. He can still go put his food in a refrigerator, and the rest of us are basically scrounging for enough to get by.”
In a statement, university spokesperson Jay Blanton said budget officials conducted “a lot of analysis of different scenarios” before landing on the furloughs and benefit reductions for workers.
“If you cut pay, it’s essentially a double hit to people,” he said. “You are impacting pay and benefits. We took the step of reducing benefits first. We hope this series of steps we are taking gets us where we need to be, even as we know additional steps might be necessary in what remains a very fluid and tough environment.”
Organizers in Michigan are also fighting back against top executives at McLaren Health Care, who have furloughed workers in several of their 14 hospitals across the state. Anger about the furloughs only increased last week, when a local ABC affiliate revealed that executives were reducing their own salaries by just 2 percent—the equivalent of one week’s lost work. (According to tax filings, CEO Philip A. Incarnati alone made $6.8 million in 2018.)
Christie Serniak, a nurse at McLaren Central, told The Daily Beast that “adequate reductions” in executives’ salaries could not only mitigate the furloughs, but help provide protective gear for frontline workers. Union leaders are calling on the health-care system to cap executives’ pay at $1 million for the year—a move they say would save $8 million to reinvest in frontline staff.
“This pandemic isn’t about money for the frontline workers,” Serniak said. “Unfortunately it just seems like it is about money for the executives at McLaren and their bottom dollar.”
A spokesperson told WXYZ that McLaren was giving employees extra time off and had started a Front Line Workers’ Fund, to which executives could donate. At the time of the article’s publication, however, no donations had been made. McLaren did not respond to The Daily Beast’s calls and emails seeking comment.
All told, executives at 24 hospitals have taken salary cuts or donated to workers’ relief funds amid the pandemic, according to Becker’s Hospital Review. Donations ranged from 20 percent of the CEO’s salaries to 100 percent. But some advocates felt even that was an empty gesture to workers struggling to get by.
At Tenet Healthcare, where thousands of workers have been furloughed, CEO Ron Rittenmeyer recently pledged to give 50 percent of his salary to an employee assistance fund over the next three months. At the same time, however, the Dallas Morning News reported that Rittenmeyer’s pay package increased by 62 percent last year, due largely to stock awards. The board voted to increase his base pay by another $300,000 this February.
In a letter to shareholders, union leaders called Rittenmeyer’s donation to workers “a gesture towards shared sacrifice.”
“However, it is only a gesture and one that is cushioned by the Board’s recent decision to boost CEO Rittenmeyer’s future annual base salary,” they wrote. “Gestures are no substitute for comprehensive pay reform that matches executive pay with performance.”
Executive pay cuts may also exclude end-of-year bonuses, which can reach almost three times the size of their base pay. Last month, Denver Health executives received bonuses ranging from $29,000 to $230,000, just one week after asking hospital employees to cut their hours and take unpaid time off. Administrators later apologized for the timing of the bonuses, but did not give all the money back.
“We regret the anger, frustration and pain that has been caused,” a spokesperson said in a statement. “Denver Health leadership is meeting with employees to listen to their concerns with the aim to heal.”
CEO Robin Wittenstein has said she will take personal time off and forgo additional PTO accrual to save the company money. She also donated $100,000 to the Denver Health Foundation some months back. The spokesperson said she and other executives had together donated more than $1 million in pay and hour reductions and pledges to the foundation.
But the concessions did not sway Denver City Council representatives, who called the bonuses “disturbing.”
“PTO days aren’t enough,” Denver City Councilman Chris Hinds said in a Facebook livestream. “We need actual dollars. We need bonuses to be returned to the community so that we can all pitch in and we can all do our part to make sure that we all kick the COVID pandemic together as a community.”
Serniak, the nurse in Michigan, said her community had been incredible in supporting health-care workers throughout the crisis. But she worried about what it meant for the health-care system if that same support didn’t come from the top.
“It doesn’t put a lot of faith into the health-care system when the CEO and the executives are making millions of dollars and subsequently disregarding the needs of the frontline worker,” she said.
