Medical executives in the University of California’s five hospitals received a total of over $2 million in bonuses for the year of 2004. While such an incentive program is common among medical programs and hospitals throughout the country, the American Federation of State, County and Municipal Employees, a union that represents over 17,000 UC service employees, is upset that the bonuses were awarded at a time when their workers have not received a salary raise.
The average bonus for the 10 executives at the UC Irvine Medical Center was $34,735. AFSCME had requested a list of the bonuses from the UC because they did not realize that the UC Board of Regents does not have to approve the bonuses.
‘We had originally thought that the bonuses were something that the Regents sign off on, but it turns out that the [UC] president just confirms them and then the Regents get a letter telling them about it,’ said Faith Raider, AFSCME spokeswoman. ‘They don’t have to vote on them and [the bonuses] are finalized.’
Ralph Cygan, chief executive officer of the UCIMC, explained that the bonuses that are awarded come from an incentive system.
‘The way the system works is that on an annual basis, the executive team sets goals for the entire institution,’ Cygan said. ‘Goals for the executives are then reviewed with each individual campus by the chancellors and the vice chancellors, and once the goals are agreed upon, it’s up to the executives to do their best to meet the goals which have been set.’
Such an incentive system is a common way for health care facilities to motivate their staff.
‘It’s standard to put a significant portion of the executives’ pay at risk so that the executives are highly motivated to perform at the highest possible level,’ Cygan said.
However, AFSCME believes that the bonuses could have gone to increasing the wages of the service workers.
‘We think it’s misuse of medical center revenues to pay executives who are already making $400,000 another $100,000 on top of that,’ Raider said. ‘It seems like misplaced priorities at a time when financial aid for medical students have been cut and low-wage workers are struggling to raise their families because they haven’t gotten raises for a couple of years.’
According to Noel Van Nyhuis, media coordinator for the UC Office of the President, the bonuses awarded from the incentive system are part of the salary structure of the executives.
‘I think there seems to be some sort of misperception that this bonus was found money … and that’s not the case,’ Van Nyhuis said. ‘It’s something that they’ve earned. It may seem skewed because they’re well-paid, but they’re well-qualified for the job.’
Despite AFSCME’s complaints that the medical executives already receive high salaries, Van Nyhuis explained that the salaries are still far below what other medical programs and hospitals offer.
‘Even with the base pay and bonuses, [executive] salaries and their bonuses combined still lag behind their counterparts at comparable university hospitals,’ Nyhuis said.
Cygan agreed and explained that higher salaries and bonuses are needed to keep qualified staff at the UC hospitals.
‘My executive team, which is extraordinarily talented, constantly receives offers from other hospitals in California at much higher salaries than they receive here. We need to keep them here. Otherwise the performance of our hospitals will deteriorate,’ Cygan said. ‘You can’t run these places with mediocre talent and you’ve got to pay to keep these people here.’
In regard to the raises that AFSCME is demanding from the UC for their workers, Van Nyhuis explained that raises will be determined by the state budget.
‘The state budget crisis has really hampered our ability to offer raises in the last two years,’ Van Nyhuis said. ‘Fortunately, our new compact with the governor will allow us to offer raises once again starting next year, if it is supported by the legislature.’
Although the UC stated that raises for the workers depends on state funding, Raider argued that raises for the service workers could have come from the bonuses awarded to the medical executives.
‘A quarter [of the worker’s funding] comes from the state, a quarter comes from medical center revenues and 50 percent comes from other things like parking fees,’ Raider said. ‘Many of the workers are funded out of the same source as the medical center executives.’
AFSCME’s main point of protest is misuse of funds.
‘In general we’re sending the message that the university is misspending their money,’ Raider said.