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EDITORIAL: Hospital out of touch on raises

In a normal economy, the decision by the board of directors of El Camino Hospital to approve a generous salary increase for its top executives might make sense. After all, El Camino is extremely well managed, very profitable and has just expanded its reach southward by purchasing the Community Hospital of Los Gatos, which has since been reopened and renamed El Camino Hospital Los Gatos.

But as everyone knows, today's economy is the worst since the Great Depression. Millions of people are out of work and millions more have lost their homes. The Obama administration is desperately trying to pass legislation that would put the brakes on rapidly escalating health care costs, which many analysts believe must be contained before the economy can recover.

Given this backdrop, the decision to grant salary increases -- a 4.7 percent raise on average for the top 12 executives -- stands out as naive. It seems El Camino's board members either do not comprehend how these raises will be regarded by the general public, or simply believe that current economic conditions should not have any bearing on salaries.

All of us have seen our health insurance costs skyrocketing. And rightly or wrongly, these costs make people chafe even more at the generous salaries paid to health care executives. At El Camino, the higher-end salaries range from $200,000 to more than $600,000 for CEO Ken Graham, not counting benefits and perks.

It is difficult to ignore these executives' successes. Under the current leadership, El Camino has advanced on many fronts, from initiating new lines of care to building a whole new hospital from scratch. The new facility is coming in on time and on budget -- not an easy accomplishment for a highly complex, multi-million dollar undertaking. Meanwhile, board members say the workload of these executives has shot up due to the purchase of Los Gatos.

But despite all these factors, the hospital board, and El Camino's top brass, must have known that from a public relations standpoint, awarding big salary increases in the current climate would be problematic. A better strategy would have been to defer increases for now with the promise that, once the economy has recovered, the issue would be revisited.

No one making more than $200,000 a year can claim hardship, and we doubt that anyone would have been recruited away because they missed a yearly raise. By delaying the increases, El Camino board members could have kept the upper hand with critics who are still charging that the decision to purchase the Los Gatos hospital was a poor one financially.

Ultimately, it's the elected board of directors that is responsible for executive compensation at El Camino. This board clearly believes that a salary increase was warranted. Anyone who disagrees with that decision has the option to run for one of the two board seats that are up in the 2010 election. The current board members have not said if they will seek reelection, but Mark O'Conner, who has served four terms on the board, was first elected in 1994. David Reeder has served since 1999. And incumbent board members rarely face opposition.

Comments

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Posted by cc
a resident of another community
on Aug 17, 2009 at 2:13 pm

It is a temporary downturn. Can't you people get that? No one was complaining when tech salaries were outrageous, and now that things are slow, everyone is whining. I had a friend that made more money than he knew what to do with. Now that he is out of work, he hates everyone that has a decent job and makes a moderate living for this area.
Sounds like whining children.


 +   Like this comment
Posted by Barry Jones
a resident of The Crossings
on Aug 17, 2009 at 2:16 pm

Hear, hear! Hopelessly out of touch is more like it! Publish the names of the people who decided this in 72 point red text on the front page so that everyone will know who the blackguards are.


 +   Like this comment
Posted by cc
a resident of another community
on Aug 17, 2009 at 2:56 pm

It's a private entity. It is none of anyone's business what people make or the raises they receive. Jeeez. What's next? How much do the Starbucks CEO types make. Who cares!
What is the next editorial? The 'outrageous benefits' that Iraq war veterans are entitled to?


 +   Like this comment
Posted by Manny
a resident of Old Mountain View
on Aug 17, 2009 at 3:40 pm

New responsibilities, facilities built on time and on budget, and from your editorial a well run company and yet you gripe about executives getting rewarded for performance. This is a far cry from bonuses for company exec who have made thier companies go broke with mis-mangement.

I feel bad for all those out of work (family and friends included), but this is not a socialist system where fees and pay are fixed. Doing a great job should be rewarded. If you do a great job during a down ecomomy and control expense and expand the business, then that is even more worthy of recognition and reward.


 +   Like this comment
Posted by concerned taxpayer
a resident of Waverly Park
on Aug 17, 2009 at 5:03 pm

ECH is NOT a private business and every taxpayer has a right to demand transparency and healthcare cost containment. ECH has benefitted for 40 years from its non-profit, taxpayer supported status. The Voice editorial is right on. The ECH Board has failed to address taxpayer concerns and is out of touch with the reality of the market. Why does the Board continue to promote ECH fiscal well being when the operating margin has dropped from 10% to 2%? Why are they not reporting to the public the financial performance of the Los Gatos hospital following the $100 million+ investment? Why are they proud of a projected $2 million profit on a $100 million+ investment? Why are they paying physicians over $200,000 for 30 hours of work per month on programs like the Cardio Vascular Institute which appear not to attract enough patients to pay for the operation? Why do they take credit for some $8 million in community benefit expenses to support Rotacare free clinic - when they don't disclose that the $8 million is offset by income from district taxpayer assessments? Why do they continue to proliferate the healthcare crisis in this country instead of taking leadership to fix it?


 +   Like this comment
Posted by cc
a resident of another community
on Aug 17, 2009 at 8:44 pm

Well the, perhaps they should be called to the carpet... will do it? That is the question.
Let's keep in mind that it is run like a major corporation, very successfully, I might add and the volume and quality of business they do does deserve these type of salaries in the private sector and therefore are not unreasonable in today's market. After all, how many Execs masterfully handling that sized budget, coupled with the overall liability of such a business aren't pulling down that type of money these days?


 +   Like this comment
Posted by Nic
a resident of North Whisman
on Aug 24, 2009 at 8:36 am

I find it very interesting that this is even a topic. In reference to the claim that they should not be proud of a 2% margin on their new project it seems a bit contradictory to your earlier statement. You would be furious if they made 10%. I think the point is to continuously invest in the Hospital to help improve the health of the community and not to sit on a pile of money. I continue to hear people complaning about the qaulity of healthcare in America when all recent indications lead to more positive outcomes. If you want mediocre results and poorly run hospitals move to canada.


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