El Camino Hospital District Board Determines Executive Compensation Initiative Would Undermine Hospital's Mission, Sends Initiative to Voters

Jun 20, 2012, 15:28 ET from El Camino Hospital

MOUNTAIN VIEW, Calif., June 20, 2012 /PRNewswire/ -- The El Camino Hospital District Board of Directors yesterday approved placement of an initiative on the ballot for the November election, although it also found that the initiative, if implemented, could impair the hospital's mission to provide top-quality healthcare to residents of the District.  The initiative seeks to limit the annual salary for certain senior executives at El Camino Hospital.  

"It's important for District residents to understand that no tax dollars go to employee salaries, which are instead funded by the hospital's operations," said John Zoglin, Chairman of the El Camino Hospital District Board. "Furthermore, the hospital Board takes a thoughtful approach to executive compensation to ensure that our employees are compensated fairly, in line with the market and in a way that is transparent to the public. Having a strong management team is an essential part of running a hospital that serves the needs of District residents."

The initiative is based on the premise that salaries of executives of the El Camino Hospital, which are published and publicly available each year, are funded by District tax dollars. However, the District has no employees. All El Camino Hospital executive and employee salaries are funded by the hospital's operations budget. The hospital Board employs a robust process with the support of outside consultants who report directly to the Board, and utilize extensive survey and data analysis to ensure wages are comparable with current market rates for all of our employees, from administrative staff to executives. As a nonprofit corporation, El Camino Hospital is precluded from paying any employee wages and benefits that exceed market rates for comparable work.

By limiting the annual salary of certain El Camino Hospital executives, managers and administrators, the initiative could inhibit the hospitals' ability to attract and retain top-level talent to manage a complex organization like El Camino Hospital. The initiative could also prompt the resignation of the Hospital's current management, and leave the hospital with a less experienced leadership team. This could ultimately have a severe impact on the hospital's ability to provide top-quality care.

Finally, the El Camino Hospital District Board of Directors believes there are legal issues with the initiative itself, as it doesn't appear state law enables initiatives to set compensation limits for employees of El Camino Hospital.

About the El Camino Hospital District
The District was established by voter approval in 1956 in accordance with California Local Hospital District Law. The District oversees and approves District tax-dollar expenditures, including expenditures for the Community Benefit Plan, which provides critical health services to the underserved. All District tax dollar expenditures are reviewed and approved at regular meetings of the District Board. The District's financial statements are independently audited and certified by a third party accounting firm in compliance with standard, legal accounting practices. All District and Hospital Corporation Board meetings are publically noticed, open to the public and video-taped. All of this information is available for public review on the District web-site: http://www.elcaminohospitaldistrict.org.

SOURCE El Camino Hospital