In the news: Huffington Post “As Kaiser Workers Face Cuts, Execs Have Enjoyed Lavish Benefits”

NewsJuly 13, 2011

By Dave Jamieson, the Huffington Post

Despite strong profits and robust executive compensation at Kaiser Permanente, workers for the Calfornia-based health care giant say they’re facing down cuts to their health and retirement benefits in pending contract negotiations.

Proposed cuts include freezing employees’ defined-benefit pension plan and switching to a less desirable defined-contribution plan, according to a flier circulated by the National Union of Healthcare Workers. Workers are being asked to accept a more costly employee health insurance plan and cuts to their retirement health benefits, the union says.

While those cuts get debated, Kaiser executives have been living well. Pay and perks for high-ranking officials at the nonprofit have been generous in recent years, according to disclosure forms.

In 2009, the most recent year for which figures were available, George Halvorson, the CEO for Kaiser Foundation Health Plan & Kaiser Foundation Hospitals, received compensation of $6.7 million. Halvorson’s package included a $1.2 million payment to his “supplemental non-qualified retirement plan.” More than 40 other officers and employees received payments to such retirement stashes — several of them in the hundreds of thousands of dollars.

Members of management have also received large “relocation” loans from the nonprofit. Philip Fasano, the chief information officer and vice president, was given such a loan for half a million dollars, according to Kaiser’s IRS filings. Disclosure forms with the State of California indicate that two of those relocation loans — including one for $500,000 — are forgivable, meaning that the principal of the loan can eventually be forgiven, so long as conditions are met in the short-term. (The state filings do not name the officers who received the forgivable loans.)

John E. Nelson, a Kaiser spokesperson, told HuffPost that the nonprofit’s executive compensation is fair and reasonable, given that between its hospital network and health plans Kaiser is “by far the largest and most complex health care organization in the nation.”

“Compensation paid to senior management is substantially less than that of many for-profit health plans, and less than would be expected when compared to nonprofit health care companies, once the size and complexity of Kaiser Permanente is taken into account,” Nelson wrote in an email. “Kaiser Permanente’s senior management have unique leadership positions, in that they have the equivalent of two roles: overseeing a major health plan with 8.8 million members, as well as a total care delivery system in multiple states with 36 hospitals, 450 medical office buildings, and 500 pharmacies.”

Kaiser reported a net income of $921 million for the first quarter of 2011. Last month the non-profit announced it would be raising premium rates by about 11 percent on 300,000 Californians enrolled in plans through small businesses — a hike much smaller than some other insurers have recently implemented, but a hike nonetheless.

Turusew Gedebu-Wilson, a Kaiser dietician who’s been involved in the bargaining talks between workers and management, says she finds the prospect of cuts to employee retirement and health benefits “shocking.”

“If the organization is making a lot of money, if the executives are making a lot of money, then why do they want to take away so much?” Gedebu-Wilson said. “To tell us that we have to be paying more is really mind-boggling to me.”

Nelson would not say whether Kaiser management indeed seeks concessions from workers, noting that the negotiation process is not complete. The nonprofit intends to bargain with workers “in good faith,” Nelson said, and it plans on providing “market-competitive” employee benefits to attract the best talent possible. Nelson declined to say whether executives would take cuts to their benefits if employees were asked to do so.

“Kaiser Permanente sets senior management compensation levels so that the organization can successfully attract and retain the leadership it needs to deliver affordable, high quality health care,” Nelson said.