BILL ANALYSIS Ó
AB 2467
Page 1
Date of Hearing: May 4, 2016
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Lorena Gonzalez, Chair
AB
2467 (Gomez) - As Amended April 21, 2016
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|Policy |Health |Vote:|11 - 6 |
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Urgency: No State Mandated Local Program: YesReimbursable:
No
SUMMARY:
This bill requires hospitals and medical groups to report
information about employee compensation. Specifically, this
bill:
1)Requires, on and after October 1, 2017, covered hospitals or
medical entities, as defined, to submit an annual hospital
executive compensation report to the Office of Statewide
Health Planning and Development (OSHPD) for every hospital
executive whose total annual compensation meets or exceeds
$250,000 per year.
AB 2467
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2)Requires reporting the number of employees earning annual
total compensation in 12 pay bands, as well as demographic
data including self-reported gender, ethnicity, and race, and
voluntarily self-reported sexual orientation and gender
identity.
3)Requires OSHPD to establish and assess reasonable fees, to be
submitted with each annual report, to cover only the
reasonable costs of implementation and ensuring compliance.
FISCAL EFFECT:
Staff and information technology costs to OSHPD of $390,000 in
year 1, $240,000 in year 2, and ongoing costs of $110,000 to
implement this bill (fee-supported by fee revenue authorized
pursuant to this bill).
One-time activities include development of regulations,
preparation of system requirements and design documents,
information technology system testing, Ongoing activities
include reviewing reports, researching which unlicensed entities
must report, contacting report entities with missing or
delinquent reports and addressing questions from the public and
policy makers.
COMMENTS:
AB 2467
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1)Purpose. This bill is intended to assess how hospital
executive compensation is contributing to overall rising
health care costs and to provide data related to pay equity in
California hospitals.
2)Background. The level and growth of corporate executive
compensation across the United States has been a topic of
significant media attention and public dialogue in recent
years. Hospitals and hospital systems are complex for-profit,
non-profit, and public organizations that provide executive
compensation packages to attract and retain executives.
Not-for-profit hospitals must report certain compensation
information on federal Internal Revenue Service form 990, but
this is reported at the hospital system level, not the
individual hospital level. For-profit publicly traded
hospitals must report salaries for the five most highly
compensated employees, while private for-profit hospitals have
no existing requirement. This bill would enhance existing
compensation-related reporting requirements and expand
reporting to more entities.
This bill also requires submission of pay data similar to that
required by recently proposed federal regulations. Gender
inequity in pay, as well as underrepresentation of females in
senior management, have been noted in the health care sector.
This bill would add demographic information to allow analysis
of pay data by demographic variables.
3)Support. The sponsor of this bill, Service Employees
International Union (SEIU), asserts hospital executive
compensation has spiked to excessive levels in recent years,
and that requiring public reporting will assist the public and
health care stakeholders to understand these compensation
practices, and how they may relate to the level of charity
care or community benefits provided, as well as their impact
on prices and utilization. Furthermore, they cite a lack of
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data on pay equity among the workforce at California
hospitals, and believe increased transparency will increase
understanding of such inequity. Labor organizations including
the California Labor Federation and the United Nurses
Association of California/Union of Healthcare Professionals,
as well as LGBT advocacy groups, also support this bill.
4)Opposition. The California Hospital Association opposes this
bill, citing a lack of connection between executive
compensation and charity care, requirements that are both
duplicative and onerous, significant privacy and safety
concerns, concern about the reliability of self-reported data,
concern the bill could actually drive up compensation by
providing a basis for executives or boards to increase wages,
and prematurity, given federal rules on pay equity reporting
are forthcoming. The California Chamber of Commerce and
numerous individual hospitals and health systems also oppose
this bill.
Analysis Prepared by:Lisa Murawski / APPR. / (916)
319-2081