By PAULA TRACY, InDepthNH.org
CONCORD – Hospital executives in Coos County would have their pay frozen with no bonuses or increases for 18 months if they lay off 10 or more workers in a department under a bill heard Wednesday by the state Senate Health and Human Services Committee.
State Sen. David Rochefort, R-Littleton, said it would ensure a bit of accountability for Medicaid funds which primarily pay for services there, but members of the board of North County Healthcare, which operates three hospitals that have authorized their CEO to make over $700,000 a year, said the bill would take away local control and could in fact impact health.
Rochefort argued that it is the public’s money that is on the line as most patients are Medicaid recipients.
NHC recently outsourced roughly 70 jobs and operates Androscoggin Valley Hospital in Berlin, Weeks Hospital in Lancaster, Upper Connecticut Valley Hospital in Colebrook and a home health agency employing 1,100 in Coos County, which the legislature last year declared a distressed based economy.
The three are nonprofit hospitals whose board is now under scrutiny by the Attorney General’s Office Charitable Trust Unit following the outsourcing, and public records that show it pays its CEO over $700,000 a year plus a housing stipend.
There has been no report on the investigation by the Attorney General’s Office. On Wednesday, a spokesman said: “We can confirm that it remains ongoing at this time.”
“Investigative reporting in the Caledonian Record and InDepthNH.org has highlighted significant workforce reductions conducted by certain New Hampshire hospitals. These reductions have included layoffs exceeding 10 employees in departments despite continued growth or insulation of executive compensation packages. The bill would only be targeted to hospitals in that county and NCH is the entire hospital operation in the county,” Senate Bill 664-FN reads.
“How hard is it to fight for Medicaid dollars? We struggle every day in this committee. They are hard to come by,” Rochefort said, and “a dwindling resource in many aspects.”
Though New Hampshire did receive a federal shot in the arm of over $200 million to help rural health care in a program being launched called GO NORTH, Rochefort worried that the problems of rural healthcare in the North Country are not being helped by executive compensation which he noted is higher than comparative hospital operations.
“Our economy is struggling, our people are struggling and the state, through the legislative process, recognized that Coos needs a little extra help,” he said.
As a business owner, Rochefort said he gets it that outsourcing may be a decision made but he has never laid people off and taken a raise.
“The bill says if you are laying off people, that public money, taxpayer money cannot then therefore go to an increase in a raise,” Rochefort said. “This is our money. This is the money we fight for every single day.”
Donald Crane of Littleton, previously of Lancaster who served on the NCH board including two years as chair and is chair of the compensation committee, said he feels what is really at stake in the bill is local control.
“This bill assumes failure which does not exist,” Crane said, and it singles out the three hospitals in Coos County leaving the rest of the state untouched.
Crane recognized that communication could have been better regarding the outsourcing of jobs “but improving communication is not the same as what the bill would do.” He said on “behalf of our patients” the bill should be killed.
Sen. Kevin Avard, R-Nashua, said he is concerned that it might set a precedent. “I am kind of struggling with this,” he said.
Rep. Lori Korzen, R-Berlin, asked for support for the bill. Many of her constituents, she said, have been laid off or their work outsourced to some out-of-state and in some cases out of the country locations.
Meanwhile, she said, the hospital is still allowed to give executive bonuses. The bill “brings some accountability,” she said.
Steve Ahnen, president of the NH Hospital Association, opposed the bill on behalf of all 26 of the state’s community hospitals and all specialty hospitals it represents.
He said the environment facing hospitals today is ever more challenging with increased demand, labor shortages, reductions in federal funds and revenue not keeping pace.
Ahnen said on average hospitals in the state have a 1.6 percent operating margin and some are now in the red. In a rural area it is even harder.
He said the government stepping in would not help and the bill is “clearly not the New Hampshire way.”
Ahnen said it takes local control away from hospital board oversight. Hospital boards set the salaries for “C-suite” executives that the bill targets. Compensation is transparent, he said.
Sen. Regina Birdsell, R-Hampstead, said while she was not entirely enamored with the legislation “you said they would be penalized?…I don’t see where it is being penalized. All they are doing is freezing a bonus,” with the bill.
Ahnen said the executives “are making decisions on what is in the best long-term interest of the institution and he noted executive compensation takes into consideration a lot of things, and one thing might be the executives’ ability to leave.
Crane was among five North County Healthcare board members representing the three Coos County hospitals opposed to the bill.
Corinne Cascadden, of Berlin, a former legislator, called it discriminatory against the free market and singled out the Coos County hospitals. She said it would negatively impact health care recruitments.
The state has the oversight right now through its Charitable Trust Unit within the Attorney General’s office, she said. “We need people who can make good decisions,” she said.
The committee was told by Cascadden that the rumor mill had 150 positions being cut but as of the most recent data there were 72 positions impacted, some vacant. Thirty were retrained into other areas of the healthcare system, one left as a dismissal and 31 others chose to leave before the changes occurred.
Asked if the C-suite executives received a bonus, Cascadden said not to her knowledge.
Are you aware, Rochefort asked, that the administrator at Cottage Hospital in Woodsville makes one third of the compensation an executive makes at NCH?
“Does she not make good decisions?” he asked Cascadden.
Rochefort pressed her on her statements that people in Pittsburg and Stratford may die because of this.
“Are you saying people are going to die if a CEO does not get a bonus,” he asked.
Cascadden said: “You can’t have a bozo leading a circus.”
Roxy Severance of Whitefield, board chair of NHC who is on its quality finance and ethics committees, offered strong opposition and said the CEO at Cottage Hospital in Littleton oversees only one hospital instead of NCH’s three.
Greg Placey, a past board chairman for North Country Healthcare, spoke against the bill and also included letters of opposition from the local ambulance provider.
“This bill is going to hurt the future of our hospitals and our care because it will become more difficult to hire qualified personnel to work for us if they know this exists,” he said.
He said the bill assumes that the NCH board cannot be trusted to properly operate the hospitals.
Mark Kelly, who in the past served on the NCH board and on Androscoggin Valley Hospital’s, also opposed the bill.
Executive compensation is governed by the board, he said, and the CEO does not set his own pay or negotiate the salary. It is made up to the volunteers and based on nationwide data.
Asked by Sen. Sue Prentiss, D-Lebanon, if a hospital is in a crisis, the CEO might decide to leave if he can’t get a raise.
Kelly said yes.
A copy of the bill is here https://gc.nh.gov/bill_status/billinfo.aspx?id=2474&inflect=2
The analysis reads: “This bill provides that any hospital located in an economically distressed community that conducts a workforce reduction affecting more than 10 employees in a single department within a specified period shall be subject to a temporary freeze on certain executive compensation. The bill provides for enforcement by the charitable trusts unit of the Department of Justice.