Nonprofit hospital CEOs would face pay limits under bill advancing in NC Senate :: WRAL.com

North Carolina lawmakers have advanced Senate Bill 978, a proposal that would cap nonprofit hospital CEO pay at 400 times the salary of the facility’s lowest-paid worker. According to the Senate Health Care Committee, the bill targets executive compensation in tax-exempt systems, which could result in million-dollar pay cuts for some of the state’s highest-earning healthcare executives.

How would the nonprofit CEO pay cap work?

The proposed legislation limits the gap between the highest and lowest earners in nonprofit hospitals. Sen. Jim Burgin, R-Harnett, used an example where a CEO could earn up to $14 million if the lowest-paid employee earned $35,000 per year.

The impact varies significantly by executive. WakeMed CEO Donald Gintzig, who earned approximately $1.9 million in 2024, would remain under the cap based on these figures. However, Gene Woods, CEO of Atrium and its parent company Advocate Health, earned about $25.8 million in 2024.

Advocate Health raised its systemwide minimum wage to $18.85 per hour this year, which equals roughly $39,200 annually for a 40-hour work week. Under the proposed 400-to-1 ratio, Woods’ compensation could be reduced by approximately $10.1 million.

Did You Know? Sen. Jim Burgin argues that state oversight of executive pay is necessary because nonprofit hospitals are exempt from paying property, income, and sales taxes.

Why is the WakeMed-Atrium merger causing concern?

The pay cap proposal coincides with a planned merger between WakeMed and Atrium Health. State Treasurer Brad Briner, who oversees the 750,000-member State Health Plan, has expressed concern that the deal could increase patient costs.

Sen. Burgin stated that hospital consolidation often reduces competition and limits patient choice, which can drive up healthcare prices without improving outcomes. State Auditor Dave Boliek and Attorney General Jeff Jackson are currently reviewing the proposal.

WakeMed contends the merger is necessary to compete with larger rivals, specifically Duke Health and UNC Health. As part of the deal, Atrium has promised to invest $2 billion into Wake County to support WakeMed’s expansion and reduce operational costs.

Expert Insight: Samantha Carter notes that this legislative push highlights a growing tension between the need for healthcare systems to achieve corporate scale to compete with giants like Duke and UNC, and the public’s expectation of accountability for institutions receiving significant tax exemptions.

What happened to the merger oversight provisions?

An earlier version of Senate Bill 978 gave state officials the power to block hospital mergers. The health committee voted Thursday to remove that language because the WakeMed-Atrium deal is already in progress.

WakeMed proposes merger with Atrium Health

The original draft also included strict transparency requirements and investigative powers for the state auditor, treasurer, and attorney general. These rules would have required reviews of fair market value and safeguards for charity care, with potential fines of up to $1 million for noncompliant executives.

Hospital advocates, including the North Carolina Healthcare Association, argued these provisions created excessive red tape. They cited rising costs and federal policy shifts as existing pressures on healthcare revenue.

What happens next for the bill and the merger?

Senate Bill 978 must be approved by both legislative chambers before it reaches Governor Josh Stein. A spokesperson for Stein stated the governor wants the attorney general to have more tools to ensure such transactions are transparent and benefit the public.

The WakeMed-Atrium merger still requires approval from the Wake County Board of Commissioners, which holds governance and real estate interests in WakeMed. WakeMed spokeswoman Kristin Kelly stated the system is awaiting regulatory clearance from the state attorney general and the Federal Trade Commission.

Executives from both systems are currently conducting roundtable discussions and listening sessions to address public concerns about the combination.

Frequently Asked Questions

What is the specific pay ratio proposed in Senate Bill 978?

The bill proposes capping nonprofit hospital CEO compensation at 400 times the pay of the lowest-paid worker.

Who is reviewing the WakeMed-Atrium merger?

The deal is under review by the state attorney general, the state auditor, the state treasurer, and the Federal Trade Commission.

Why did lawmakers remove the power to stop mergers from the bill?

Sen. Jim Burgin stated the language was removed because the WakeMed-Atrium deal is already underway and some legislators felt it was no longer the appropriate time to implement those specific restrictions.

Do you believe state-mandated pay caps are an effective way to ensure nonprofit hospitals prioritize patient care over executive compensation?