California union targets Arizona hospital executive salaries with new initiative | Arizona Capitol Times

Key Points:

• California union proposes cap on Arizona hospital executives’ pay

• Initiative would limit executives’ salaries to 15 times the state minimum wage

• The initiative may face legal challenges due to executives’ multi-state duties

A California union hopes to convince Arizona voters to approve a cap on how much hospital administrators can be paid in the state.

A new initiative by the Service Employees International Union-United Healthcare Workers West would prohibit hospitals from paying their executives more than 15 times the state minimum wage. With the current minimum here at $14.70, that translates out to $458,640 a year.

By contrast, he said, many people who provide direct medical care are being paid less. Moreover, at the bottom of every hospital employment hierarchy are many who are earning that $14.70 minimum wage.

At the same time, Rodd McLeod, spokesman for Arizonans for Responsible Healthcare, said Peter Fine, the CEO of Banner Health, is bringing in $14 million a year. He also cited seven-digit pay for the top executive at Mayo Clinic and at CommonSpirit Health, the parent company in Arizona of Dignity Health, and Barrow Neurological Institute.

Backers need to gather 255,949 valid signatures from Arizona voters on petitions by July 2 to put the measure on the 2026 ballot.

And while the fight is specifically about the pay of hospital executives in Arizona, the sentiment for change goes back more than a decade.

Its approval would be part of a multi-year fight between SEIU-UHCW, which has no members in Arizona, and California hospitals.

Brittney Kaufmann, CEO of the Health System Alliance of Arizona, panned the idea.

“The proposal by a California-based union would make it harder to recruit and retain the top-tier talent our state relies on and would hinder our ability to ensure residents can access the innovative and lifesaving services they need and deserve,” she said in a prepared statement. Her organization represents the largest health care providers, including Banner, Dignity, HonorHealth, Abrazo Health, Carondelet Health Network and Northern Arizona Healthcare.

Kaufmann said the state’s health system is already facing “unprecedented strain.”

“And it is unfortunate that instead of working together to protect access to care for Arizonans, the union has elected to introduce policies that would only jeopardize care,” she said.

McLeod said that ignores what he said are already unreasonable costs being charged for medical care.

“We believe that people are being overcharged and are in pain,” he said. “And one of the reasons is you’ve got people at the top making gazillions of dollars.”

McLeod said hospital administrators are “smart, hard-working people” and deserve a decent salary.

“But $458,000, I don’t know how it sounds to you, sounds pretty good to me,” he said. And McLeod said he believes a cap on top salaries “will exert downward pressure and make sure that more of the money is going to actual care for families.”

One issue that may provoke litigation — assuming the measure is approved — is how to determine which executives would be subject to the pay cap.

Many of the hospitals are part of multi-state corporations. And the top executives are paid more than what the initiative would allow.

For example, documents filed with the IRS by Dignity, the affiliate of CommonSource, which has hospitals in 23 states, show compensation of more than $21 million to Lloyd Dean, listed as “chief executive emeritus and founding executive.” There’s another $15.4 million for CEO Wright Lassiter III and $9.8 million for Marvin O’Quinn, the chief operating officer.

But the union, in its press release, cites a $2.6 million figure for Dignity as the salary that would be affected, which matches up with figures for Tim Bricker, listed as president of the central region.

What it comes down to, McLeod said, is that there are limits on what Arizonans can do about the problem through the Legislature or the ballot box.

“It is intended to be an Arizona law which deals with Arizona executives,” he said.

And what of those who have duties in multiple states?

McLeod said there’s nothing in the initiative to pro-rate how much of each executive’s duties are performed in Arizona. Instead, it’s an all-or-nothing proposal.

“If you’re the CEO of 20 hospitals in 20 different states, I don’t think the state of Arizona would have any ability to limit the pay that someone makes in a different state for a corporation doing business in a different state,” he said.

But McLeod acknowledged the question of whether the cap would apply when you have an executive of a multi-state hospital chain who lives in Arizona, but also is overseeing hospitals both here and elsewhere, still stands.

This isn’t the union’s first foray into Arizona ballot politics.

In 2014, the same union, which represents about 120,000 health care workers in California, proposed a similar pay cap for hospital executives in that state. It backed off, however, after reaching a deal with the California Hospital Association to negotiate over issues, including hospital compensation.

When that effort failed, the union refiled the measure in California, but it was withdrawn from the ballot in 2016 after a judge ruled that the initiative violated the terms of that 2014 agreement.

So the SEIU took its campaign next door to Arizona, spending $2.1 million to propose a cap of $450,000, a figure picked because it equals the pay and expense allowance of the president. It folded amid legal challenges to many of the signatures on petitions.

The union fared no better in 2020 when an Arizona judge found insufficient valid signatures on petitions for that effort.

Now, the union is back with the bid to put the issue on the 2026 ballot. But it’s not just in Arizona. It’s also trying to put a similar cap on pay for hospital executives on the 2026 California ballot.