Hospitals say $9M CEO pay isn’t a sign they can help Taveras

Rhode Island Hospital’s parent company paid its CEO $9.5 million in 2009, but the industry’s top lobbyist says that doesn’t mean Providence’s hospitals can afford to start contributing money to the city budget.

“You have to look at the role hospitals play in their community,” Ed Quinlan, president of the Hospital Association of Rhode Island, told on Thursday. “Executive compensation is determined by hospital boards based on the financial performance of the hospital, based on the financial stability of the hospital – there’s multiple factors.”

Local hospital chain Lifespan’s CEO George Vecchione earned $9.5 million in fiscal 2009, after getting paid $3.2 million in 2008 and just under $3 million in 2007, federal income tax filings show. House Speaker Gordon Fox cited Vecchione’s compensation on “Newsmakers” last month as evidence that all nonprofits should contribute.

Quinlan declined to say whether a portion of the money Lifepsan uses to pay Vecchione should be redirected to the city that’s home to three of its hospitals: Rhode Island, Hasbro Children’s and The Miriam. “I couldn’t respond to a specific case, because I’m not party to those discussions,” he said.

Providence Mayor Angel Taveras said Thursday the city is on “the brink of bankruptcy” and will be forced to file for Chapter 9 if retirees don’t agree to concessions and tax-exempt colleges and hospitals don’t contribute more to the budget. The schools began making voluntary payments under a 2003 agreement, while the hospitals never have.

That’s because they spend an enormous amount of money annually providing medical services to residents who never pay, unlike many cites which have public acute-care hospitals, Quinlan said. Total uncompensated care provided by Rhode Island’s 12 hospitals rose from $105 million to $160 million over the last four years, he said.

“Providing over $100 million in uncompensated care is the ultimate form of shared sacrifice,” Quinlan said. The state has reduced its Medicaid reimbursement for charity care from $35 million to $4 million over the same period, he said.

“We share the impact of a distressed state budget,” Quinlan said. “Private hospitals being asked to offset lower payments from state government is different. We’re not asking the city of Providence to offset lower payments from state government.”

“You know, the governor declared this ‘the Year of the Cities and Towns,'” Quinlan added. “There has not been, in recent years, a year for hospitals.” Two of Providence’s five hospitals – Rhode Island Hospital and St. Joseph’s – had a negative operating margin in 2011, he said.

Taveras said Thursday he wants to hold a meeting with the CEOs of the hospitals to discuss the city’s budget woes. Quinlan called that “appropriate.” He didn’t rule out the possibility of payments from them to Providence, saying: “No one is establishing markers. But I think we each have to establish the realities of our financial situations.”

Like the colleges, the hospitals point to their positive economic impact on Providence and the state [pdf], as well as their comparatively strong prospects for growth, in arguing they shouldn’t be forced to fork over as much money to the city budget as Taveras wants.

All but three of Boston’s 12 tax-exempt medical institutions made voluntary payments to the Massachusetts capital as of fiscal 2009, according to a study by the Lincoln Institute of Land Policy. The size of the payments ranged between $2.2 million from Mass. General and $77,534 from Spaulding Rehabilitation Hospital.

“Boston has one of the longest standing [payment in lieu of taxes] programs and the most revenue productive program in the country,” the study found. Boston got $15.7 million from its tax-exempts in fiscal 2009. That was less than 1% of the city’s annual budget and 4.3% of what they would have paid under the commercial property tax rate, the study said.

Quinlan said nonprofit hospitals in Boston and New Haven, Conn., are “significantly different” from those in Rhode Island because their financial conditions are stronger.

Ted Nesi ( ) covers politics and the economy for and writes the Nesi’s Notes blog. Follow him on Twitter: @tednesi

• Interactive: How much Providence’s tax-exempts own and how much they pay

11 thoughts on “Hospitals say $9M CEO pay isn’t a sign they can help Taveras

  1. This is a perfect example of why the average person is so fed up with the status quo. A non-profit can give it’s CEO a raise of $6million and then with a straight face claim poverty prevents them from contributing payments in lieu of taxes. What a farce!

    And the $100 million in uncompensated care he is claiming is almost certainly an inflated figure based on list price NOT what the services actually cost the hospitals to provide. For example, I have to have certain blood tests done every 3 months. If I did not have health insurance the cost the lab would charge would be about $131, but the cost actually charged to my insurer is usually $29. Now you can’t tell me that the lab is losing money on the tests – rather they just gouge the poor sucker who doesn’t have health insurance. Well, the uncompensated care figure of $100 million is the same thing – it’s what they would charge the person without health insurance – NOT what it actually costs the hospitals to provide the service.

  2. And while the CEO of Lifespan is making almost 10 million dollars a year his employees are being held to a 1.5 % raise this year ( not even close to the increased cost of living) and to add insult to injury Lifespan will not contribute to matched savings anymore.

    So, the city should start a war with the schools and hospitals and churches, ALL should pay their fair share.

    • What would happen if RIH was required to make tax payments to the city? They would start laying off an already overly streched thin staff to the point of a potential disaster. I would not want myself or a family member to be a patient there if these cuts happen. Besides the more than 6,000 jobs RIH/Hasboro provides there is millions that go into research to improve patient care in the future. Sorry Tavaers, look for other ways to get Providence out of the financial hole.

  3. What you liberals, don’t understand is that Mr. Vecchione’s salary will trickle down to
    the rest of us… eventually. Imagine all the money he spends on gardeners, au pairs, and other household help. I’m sure he’s keeping several local restaurants in business all by himself. Imagine all the beauticians his wife keeps employed with facials and pedicures. (Honey, I hope your getting a piece of this pie.)

    He’s also cut down on the number of wrong-site surgeries. I haven’t heard of one in weeks, maybe months. That’s gotta be worth a couple of million right there.

    And honestly, who is going to take a job like this for say $7 million? You get what you pay for. Yes, for $9 million you could hire a hundred people and pay them $90,000 each. But what kind of class of people would you get for that money?? Maybe a commoner who went to public school. Ew!

    What this man really deserves is a tax break.

  4. My question is why did the Mayor put forth an unrealistic budget? The city’s budget is riddled with unachieved savings and unrealized revenues. The more things change, the more they stay the same.

    Booking $9 million is additional $ from the nonprofits was irresponsible. The Mayor and Council had no realistic expectation of obtaining this money from the nonprofits. He’s making the same budgetary mistakes as his predecessor.

    And, what’s worse…The Assembly gives the City $3.9 million in PILOT funds in the current budget…but no, that doesn’t count toward the $9 million. And Brown puts $2 million on the table…Shove it, its not enough.

    That’s $6 million right there!

  5. When the business environment is so against business, what do you expect? You will not get ethical or quaility people to want to work in this atmosphere. When will the people of Rhode Island realize, everytime you re-elect the same pathetic people who only know how to raise taxes and spend other peoples money and not reduce spending, these are the results you can expect? The majority of you brought this on, I live in Rhode Island but am not from here, you people think you are owed a living, you are not! Don’t think the American taxpayer needs to bail your nasty asses out just because you elect people who you think are your friends because they give $500 to your kids little league, while raising taxes that elminate 500 private sector jobs.
    Here is what I think of most of you! I am not from Rhode Island and I find the people of Rhode Island myopic, provincial, show lack of insight, are emotionally gifted, have poor judgment, are ethically challenged, and are morally bankrupt. Then they question why the state leads in everything negative and brings up the rear in anything positive.
    I don’t run a company. I can see this of Rhode Islanders. What type of impression do you think someone runs a company or who wants to expand their company thinks of Rhode Islands population?

  6. As a former resident who grew up in RI, I concur with Ed. The provincial attitude and lack of forward vision by the political leaders are some reasons why I left the state 30 years ago.

    Similar to MA Rhode Island needs to abandon its one party majority and gain some parity to ensure checks and balance in its government. If not the insanity will continue and a beautiful state will continue to spiral downward.

    A sense of entitlement by the population is ruining this state and country.

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