New Consumer Group Study Finds $213 Million Could Be Saved by Capping Hospital Executive Salaries (March 22, 2011)

Tuesday, March 22, 2011


Using the Industry's Own Numbers, Study Shows that New York State 
Could Save More Money Capping Hospital Executive Salaries Then Capping Funds to Brain Damaged Babies.

Statement of Joanne Doroshow, Executive Director, Center for Justice & Democracy: 

The Medicaid Redesign Team (MRT) dominated by hospital and industry lobbyists, crafted a proposal that is now part of the Governor’s budget, which would provide a financial windfall for negligent hospitals, incompetent health care providers and their insurance companies. This proposal will drastically limit their responsibility to injured patients, especially brain-damaged babies, by “capping” non-economic damages as $250,000 and forcing parents of brain-damaged babies into a burdensome and discriminatory claims reimbursement system. 

The MRT “scored” savings from these medical malpractice limits at a very high number of $208 million based largely on lower malpractice premiums. This number was arrived at based on private industry data with no independent verification or analysis, and no publicly-released government information to support it. In fact, history is clear that capping medical malpractice awards does not lead to lower premiums for doctors or hospitals because what drives rate hikes is not the state’s “tort” law. 

However, taking the MRT and the Governor at their word for purposes of our analysis, the question becomes whether there are ways to find an equal amount of Medicaid savings that does not drastically harm profoundly injured children and other patients who got that way due to medical negligence. 

The answer is yes. In fact, not only could savings be found, but the entire amount of projected savings from the medical malpractice proposals could be found - and more - simply by not overpaying hospital executives. 
Specifically, our analysis finds that if hospital executive salaries were capped at $250,000, (such as proposed by legislation sponsored by Assemblymember Deborah Glick), hospitals would no longer need $213,376,378. If this amount - $213,376,378 - were deducted dollar for dollar from Medicaid payments to these hospitals, New York State would save more than the amount that the MRT claims would be saved through its very unfair medical malpractice measures. 

What’s more, while the MRT and Governor’s “savings” numbers are undocumented and made up, our numbers are documented and indisputable. Clearly, proposals to solve our state’s Medicaid problems on the backs of families who already face unimaginable challenges caring for profoundly disabled children are without compassion and are wrong for this State. Capping executive salaries for hospitals that exist because of public funds, some of which are in the millions of dollars, is the far more fair and humane way to go.

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