Ontario to limit hospital executives’ pay
The Ontario government plans to create new accountability rules to target the generous pay packets of hospital chief executive officers, part of an initiative aimed at reining in skyrocketing health-care costs.
Ontario Finance Minister Dwight Duncan said the government will introduce legislation this spring that would hold hospital executives accountable – through compensation – for the quality of care provided in their organizations.
Hospital CEOs are in the spotlight over the lucrative salaries they are earning even as cost pressures in many of these institutions are leading to nursing layoffs and service cuts.
Fourteen hospital CEOs made more than $500,000 last year, according to the annual sunshine list of public sector workers who earned more than $100,000.
“If a CEO has an enormous pay increase and talks to employees about holding the line, it undermines their credibility,” Mr. Duncan told The Globe and Mail’s editorial board yesterday.
Until now, the McGuinty government has played a hands-off role on compensation for hospital CEOs, leaving it up to boards of directors to set pay levels. That would change under the legislation.
Sustaining the health-care system that most Canadians take for granted is the toughest challenge facing governments across the country. In Ontario alone, health-care costs will rise 6 per cent this year to $46.1-billion. Salaries for hospital executives, doctors, nurses and other health-care workers will account for nearly two-thirds of the additional $2.6-billion in spending.
The proposed legislation is part of the government’s call for a wage freeze for one million public sector workers to help Ontario erase its record $21.3-billion deficit.
“You cannot expect a front line nurse or clerk to just accept the notion that you’ve got to restrain your pay when they see CEOs getting huge increases,” Mr. Duncan said.
The government is also introducing changes to the province’s prescription drug system to lower costs for generic drugs. But Mr. Duncan said health care is primarily driven by the cost of services provided by “human beings.” As a result, he said, wrestling with compensation – something he acknowledges won’t be easy – is the single most effective way to curtail the rate of growth in health-care spending.
Health care in Ontario now accounts for 46 cents of every $1 in program spending. Left unchecked, Mr. Duncan said, it could account for 70 cents of every $1 in 12 years.
He has not assigned a target regarding how much money the province would save through the proposed legislation. But he said the push to rein in compensation has to start at the top.
The government froze wages for two years for MPPs and 350,000 non-unionized public sector workers in last week’s provincial budget. It also put teachers, nurses and other unionized workers on notice that there will be no money for wage hikes when their contracts expire.
The government will save $750-million from the wage freeze with non-unionized workers. By fiscal 2012-13, it aims to reduce the overall growth in health-care funding to 3 per cent a year.
Mr. Duncan acknowledged that the government is embarking on a new era of restraint with the province’s nurses, teachers and water inspectors. But he stressed that the governing Liberals are intent on avoiding the highly charged atmosphere that greeted the previous Conservative government when it made deep funding cuts to health care and education in the mid-1990s as part of its Common Sense Revolution.
“We don’t want to lose a million student days in Ontario in education, but we have to deal with these issues,” he said.
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