Los Angeles voters will decide next spring whether to limit pay for hospital administrators, capping their total pay and other compensation to $450,000 a year, after the Los Angeles City Council voted Wednesday to pass the proposed measure on the ballot of March 2024.

The LA ballot measure is backed by a union representing health care workers, which claims pay for hospital administrators is excessive and inconsistent with the mission to provide affordable care.

SEIU-United Healthcare Workers West argues that hospital administrators should not earn more than the total compensation of the President of the United States, which is currently $450,000 according to the ballot.

“Healthcare executives receive lavish multimillion-dollar salaries that far exceed the wages of health care workers, and patients struggle to afford basic care. The current compensation structure incentivizes wealthy executives to keep the system the same,” said SEIU-UHW spokesperson Rene Saldaa. in a statement. Excessive compensation for managers diverts money to a small group of individuals who could be invested in expanding access to quality, affordable care for all.”

The Hospital Assn. from Southern California called the proposal “deeply flawed” and argued that it would make it more difficult for Los Angeles hospitals to

retain yards

top talent, who prefer to join

healthcare

facilities in other cities.

That would “ultimately jeopardize the quality and affordability of health care in the city,” the association wrote to the municipality.

The measure will do nothing to reduce health care costs or improve the quality of care in the community,” said Jan Emerson-Shea, California Hospital Assn vice president of external affairs. “On the contrary, it will only make it more difficult to recruit qualified hospital leaders, including physicians and nurse leaders.”

After supporters of the measure collected enough signatures, councilors had the choice of putting the proposal to a vote or simply adopting it. The council voted 10 to 0 to send the proposal to the ballot for voters to decide

with Councilman John Lee stepping down as a board member of West Hills Hospital.

Earlier this year, the California Hospital Assn. unsuccessfully tried to stop the measure in court, arguing that voters had been misled because a series of additional payments and benefits brought the total compensation for the US president well above the $450,000 quoted by SEIU-UHW. In April, a judge rejected the association, allowing the measure to move forward.

The proposed measure would limit executive pay for a range of top executives, including CEOs, chief financial officers, executive vice presidents and administrators, at private hospitals and their affiliated clinics, skilled nursing facilities and senior housing facilities in the city of Los Angeles.

The limit would not apply to medical professionals whose “primary duties” are to provide medical services or direct care to patients.

If hospital drivers receive more than the annual limit, they must pay back that money plus interest. Violating the law would result in fines of up to $1,000 per violation, and each day a violation is committed or continues counts as a new violation.

The annual cap would apply not only to wages, but to a range of benefits for Los Angeles hospital executives, including paid time off, bonuses, travel, housing allowances, stock options and severance payments.

SEIU-UHW said at least 22 executives would be affected by the measure, but the number is probably higher because the analysis of publicly available information did not include for-profit hospitals. It is now pursuing similar measures in the cities of Chula Vista and La Mesa, Saldaa said.

The union has previously pushed for limiting pay for hospital executives, including a nationwide ballot measure that was scrapped nine years ago after SEIU-UHW reached an agreement with hospitals.

It has put pay packages in the spotlight

exceed

$1 million

annually for executives in hospitals and health systems such as Cedars-Sinai, where the top executive received

more than 6 million dollars

in compensation through the medical center and related organizations in a recent year, according to tax returns. Cedars-Sinai said in a statement that setting executive staff compensation will involve “a review by outside, independent experts” and that if the ballot measure passes, “we would not be able to recruit clinical, academic and management leaders and preserve those that have made us a world-renowned academic medical center.” The latest proposal to curb executive pay comes as the hospital industry has attempted to fend off $25-an-hour wage measures for healthcare workers backed by SEIU-UHW. One LA measure championed by the union was

put on hold

after hospital groups successfully pushed for a referendum. The California Hospital Assn. also fought against a state law,

SB 525

that would raise wages to at least $25 an hour for workers in a range of healthcare facilities and agencies, including hospitals, skilled nursing facilities, clinics and home health care facilities, for years to come.