North Carolina lawmakers are zeroing in on executive pay at the state’s nonprofit hospitals — a proposal that could cause at least one healthcare executive to take a massive pay cut.
Senate Bill 978, which advanced out of the Senate Health Care Committee Thursday, would cap compensation for chief executives of nonprofit hospitals at 400 times that of the lowest-paid worker.
The bill was introduced in late April, as a proposed merger between WakeMed and Atrium Health was being formulated, and made public in early May. The deal has drawn scrutiny and calls for more oversight from state and local officials, including several who warn it could raise the cost of care for some patients.
Sen. Jim Burgin, R-Harnett, a co-chair of the healthcare committee, said the state should have a say in what nonprofit hospitals pay their executives because they don’t pay property, income or sales taxes.
“Taxpayers in North Carolina are basically shareholders in a not-for-profit [hospital],” Bergin, the bill’s primary sponsor, said Thursday. “… That means we are basically making sure that they stay in business. I have a problem with the CEO making as much as some CEOs make.”
Under the bill, a nonprofit hospital’s CEO could make up to $14 million if the company’s lowest-paid employee made $35,000 per year. That’s the example Burgin used. “That’s a pretty big spread,” he said.
By that math, WakeMed CEO Donald Gintzig, who was paid about $1.9 million in 2024, would still have plenty of room for a raise. Asked about that, Burgin said: “You need to, you need to look at the other side of that equation. Who makes $26 million dollars?”
Gene Woods, the CEO of Atrium and its parent company Advocate Health, made about $25.8 million in 2024. Advocate — one of the largest hospital systems in the nation — raised its systemwide minimum to $18.85 per hour this year. Based on a 40-hour work week, that’s about $39,200 per year. By that math, Woods’ pay could be cut by about $10.1 million if this bill became law.
An Atrium spokesperson didn’t immediately respond to a request for comment. A WakeMed spokesperson didn’t immediately provide a comment on the compensation portion of the bill.
The bill originally would’ve given state officials new powers to stop such a merger, but the health committee voted to remove that language from the bill Thursday.
Burgin agreed to take that language out because the WakeMed-Atrium deal is already underway, but said he hopes it at least starts a conversation about oversight of future mergers.
Hospital merger concerns
Lawmakers and other state officials have been fixated on hospital expenditures as they inspect the nuts and bolts of the WakeMed-Atrium deal.
Opponents of the deal, including State Treasurer Brad Briner who runs the 750,000-member State Health Plan, worry it could lead to higher prices for patients. State Auditor Dave Boliek and state Attorney General Jeff Jackson are also reviewing the proposal.
“Hospital consolidation drives up the cost of health care and can contribute to reduced competition and limited patient choice,” Burgin said. “When large systems acquire smaller providers, it often results in higher prices without necessarily improving access or outcomes.”
WakeMed, one of the smallest hospital systems in the state, says the combination with Atrium can help it compete with bigger rivals UNC Health and Duke Health. In return, Atrium is promising to invest $2 billion in Wake County, where WakeMed has ambitious expansion plans. The partners say the merger would help WakeMed reduce operational costs.
The deal has drawn calls for more oversight from state and local officials, including some who became aware of the deal only after it was quietly disclosed to the public in a Wake County Board of Commissioners meeting agenda. The county board would have to approve the deal because it maintains governance and real estate interests in WakeMed.
Gov. Josh Stein has called on legislators to “empower the attorney general to better protect North Carolinians,” a Stein spokesperson said in a statement last month when asked about the proposed deal. The spokesperson said Stein, as a former attorney general, knows the state Department of Justice needs “more tools in the toolbox to ensure these types of transactions are transparent and actually benefit the public.”
“North Carolinians deserve access to high-quality, affordable health care, and Governor Stein knows that strong competition and transparency help make that possible,” a Stein spokesperson said in a statement Thursday. The bill would need approval from both legislative chambers before going to Stein for consideration.
‘A lot more information’
A previous version of the bill included provisions to increase transparency requirements for hospitals and enhance investigative responsibilities of state officials. Those provisions would have required the offices of state auditor, treasurer and attorney general to review hospital mergers and other transactions that lead to the transfer of control or governance of a hospital.
Under that version, the officials would have been tasked with determining whether a fair market value was being applied to the deal, and to ensure safeguards existed to preserve affordable care, charity care, and to verify that the proposed deal wouldn’t lead to increased costs for consumers. Hospitals would have faced disclosure and public hearing requirements and possible penalties for noncompliance, including possible fines of up to $1 million for executives.
Hospital advocates said that version of the bill created too much red tape at a time when healthcare companies are grappling with rising costs and federal policy shifts that are eating into revenue. The North Carolina Healthcare Association said it had been in discussions with lawmakers.
If that version of the bill had been law when the WakeMed merger was conceived, “we would have a different situation going on right now,” Burgin said Thursday. “There would be a lot more discussion, and I think we’d have a lot more information out in public.”
Burgin said the oversight provisions were scrapped after other lawmakers questioned the timing of the bill, given the progress of the deal. “I had different people in our caucus and in our legislature that felt like they’re so far in this current situation that this might not be the appropriate time to do it,” he said.
He added that he planned to keep working on the oversight ideas, hoping to garner support in the future. “After we see how the process works out here locally, it’ll give us a better indication of why we need this,” he said.
In the meantime, WakeMed still needs the county’s approval to move ahead with the deal. The Federal Trade Commission and the state attorney general are also reviewing the deal, according to WakeMed.
“We appreciate the senators preserving the authority of the Wake County commissioners to make the best decision for the county,” WakeMed spokeswoman Kristin Kelly said in a statement Thursday.
As the system waits for regulatory clearance, WakeMed and Atrium executives have spent recent weeks hosting roundtable discussions and listening sessions to educate the public about the deal. Last week, they faced hours of questions from Wake County commissioners.
“We also look forward to continued conversations with the commissioners and the community on how our proposed strategic combination with Atrium Health will improve access to health care services for all Wake County residents,” Kelly said.