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.