Some hospitals in Washington state are paying their executives so much that the hospitals may no longer quality for business tax breaks.
Public radio station KUOW in Seattle reports that 15 hospital executives in Washington earned $1 million or more in 2009, including 14 at nonprofit hospitals and one at a government hospital.
State law limits how much nonprofit hospitals can pay executives. Their pay has to be comparable to what public servants in Washington make in similar jobs, or they don't get a break on their B&O taxes.
Tens of millions in tax breaks could be at stake, the radio station reported.
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Mike Gowrylow, a spokesman for the Washington Department of Revenue, says the million-dollar pay is news to the agency.
"It's certainly something that I think we need to take a look at again and examine whether these nonprofits are paying their executives excessively or not," he told KUOW.
Several hospital officials say they believe they are in compliance with state law. Representatives with Providence and Group Health both said their organizations are so large and complex that there may not be any comparable public service jobs in Washington.
Swedish CEO Rodney Hochman's pay was generally comparable to what the highest paid public hospital executives made at Valley and Evergreen hospitals, spokeswoman Melissa Tizon said.
"Something is out of line here," said state Sen. Karen Keiser, who is chairwoman of the health and long-term care committee.
It would be better to measure nonprofit pay against paychecks closer to the middle of the market, Keiser said, instead of comparing to just the state's highest executive incomes.
Eileen Whalen, the director of Harborview Medical Center in Seattle, makes $470,000, for example. Harborview is the state's largest hospital. Other executives at UW Medicine made more than Whalen, but none of them made as much as any of the 15 highest paid executives at nonprofit hospitals in 2009, according to KUOW.
The issue of hospital pay has become a hot issue at Valley Medical Center. CEO Rich Roodman earned $2.6 million in 2009, more than anyone else at a hospital in Washington. Most of that was a retirement package Roodman got to cash in early for not retiring, a deal that drew criticism from the state auditor.
After learning of KUOW's findings, Keiser introduced a bill that would require nonprofit hospitals to disclose top executive pay annually. It also requires them to provide proof that the pay is in line with comparable public sector jobs.