Rhode Island Lawmaker Criticizes CEO Pay Amid Layoffs

Healthcare professionals are dedicated to serving patients while facing challenges related to executive compensation.

News Summary

Rhode Island State Representative Joseph Serpa raises alarms over escalating salaries of healthcare CEOs juxtaposed with layoffs at the Providence Community Health Centers (PCHC). While PCHC announced 70 employee layoffs, its CEO, Merrill Thomas, saw a 47% salary increase to $621,513. Critics argue this pay disparity highlights a troubling trend in the nonprofit healthcare sector. In response, Serpa proposes legislation to enhance transparency regarding nonprofit compensation practices, sparking a broader dialogue on wage equity within the industry.

Providence — Rhode Island State Representative Joseph Serpa has raised significant concerns regarding the rising salaries of healthcare CEOs amid recent layoffs at the Providence Community Health Centers (PCHC). Serpa’s statements come on the heels of PCHC’s announcement to lay off 70 employees, which accounts for approximately 12% of its workforce.

While PCHC is navigating these financial decisions, its CEO, Merrill Thomas, received a substantial salary increase of 47% over five years, reaching $621,513 in 2023, with total compensation estimated at $650,669. Serpa believes this stark contrast between executive pay and workforce reductions is egregious, particularly for a non-profit organization designed to serve the community.

PCHC has defended its executive compensation by stating that salaries are determined by its Board of Directors based on market surveys conducted within similar organizations. This justification has raised eyebrows among healthcare workers and advocates who express concern over perceived discrepancies between executive pay and the financial realities faced by frontline employees.

The criticism extends beyond PCHC alone. For instance, the former CEO of Lifespan/Brown Health, Timothy Babineau, had a reported total compensation package of nearly $6,836,842 in 2023. Such figures fuel the ongoing dialogue about the appropriateness of exorbitant salaries in the healthcare sector, particularly amidst layoffs and ongoing challenges in patient care delivery.

In response to these concerns, Serpa has introduced legislation aimed at bolstering transparency regarding non-profit compensation practices. Proposed House Bill 2025-H 6265 would mandate that any non-profit organization receiving state funding must disclose the salaries of their ten highest-paid employees. This legislative initiative seeks to ensure that taxpayer money is used responsibly and that there is accountability in the decisions made by non-profit boards regarding compensation.

In tandem with Serpa’s effort, Senator John P. Burke has introduced similar legislation in the Senate with Bill 2025-S 0579, underscoring a bipartisan push for accountability in compensation practices among non-profit organizations. Serpa’s legislation underscores the importance of public transparency, particularly where state funding contributions are concerned.

Critics of high executive salaries argue that excessive compensation often diverts crucial resources away from essential services and patient care within healthcare organizations. The growing call for transparency emphasizes the necessity of aligning executive pay with the services provided to communities, particularly in the non-profit healthcare sector.

Healthcare workers, particularly nurses and support staff, have echoed concerns regarding the increasing disparity between executive compensation and their own wages. In light of recent layoffs and ongoing labor disputes, many healthcare professionals are advocating for improved wages and better staffing levels within their facilities. This ongoing discussion encapsulates the broader conversation about the sustainability of non-profit healthcare organizations and their commitment to the communities they serve.

As the legislative process unfolds, the outcome could set a significant precedent for non-profit accountability and transparency in Rhode Island’s healthcare landscape, especially in the wake of rising healthcare costs and increasing demands for quality patient care.