Laundering and Medicaid: State Operations Have Incentive to Be Inefficient

moneyclock-laundry

From the time she took a job with the State of Rhode Island in 1979 to 2011, Judith Andrade had worked her way up to regular pay of $37,091 as a laundry worker at Eleanor Slater Hospital. According to payroll data collected by the RI Center for Freedom & Prosperity she actually took home $76,320 that fiscal year, with overtime pay. The year before, her total had been $79,283.

In an article on the Ocean State Current, yesterday, Suzanne Bates detailed the dozen nurses and psychiatrists at the hospital making over $100,000 in overtime alone. The experience of Judith Andrade shows that it isn’t just the nurses who offer personal care who are able to more than double their listed pay at the facility.

Employees at the central laundry of the state Department of Behavioral Healthcare, Developmental Disabilities and Hospitals (BHDDH) do even better than she does.  Senior Laundry Worker David Pelcher, Jr., reached $123,153, more than three times his regular pay of $37,397, in 2011. At 1.5 times pay on a 40 hour workweek, Pelcher would have had to work over 100 hours per week, every week, to reach that amount.  The year before, his gross pay was $108,645.

Laundry Manager Lourenco Lopes received regular pay of $56,103, in 2011, but took home $98,908. In 2010, his total reached $114,509.

All told, employees of BHDDH collected overtime of $20,030,510 in 2011, which is 33.7% of the department’s regular pay. In other words, the average employee enhanced his or her pay by that much.  At Eleanor Slater, the percentage is even higher, around 37.6%. That’s based on an estimated $8.6 million in overtime on regular pay of $23.0 million.

(The current personnel list that the state provided to the Ocean State Current shows 1,236 apparent new hires for BHDDH since the 2011 payroll data. Another 370 employees were on the payroll that year but are no longer listed with the department, most having likely retired. It was necessary to infer work locations for the latter group of employees from their divisions.)

According to audited state budget numbers, more than half of BHDDH’s $451.0 million in expenditures for fiscal year 2011 came from the federal government, mostly through Medicaid. That fact helps explain why the labor unions and management were able to enhance employees’ salaries by so much.

In addition to the 33.7% overtime enhancement, employees of BHDDH receive a total benefits package worth approximately half again of their salaries, according to budget documents. Through an agreement with the Rhode Island Executive Office of Health & Human Services (EOHHS), the department receives a total appropriation that includes Medicaid. EOHHS then bills the federal government for its share, which is based on the cost of providing care at a particular facility, not on a set list of prices per procedure.

In other words, government-run healthcare facilities, like Eleanor Slater, receive payment for their services through multiple tiers of government that collect taxes from different sources and through different agencies. As long as the state government can collect hundreds of millions of taxpayer dollars from the federal government, little incentive exists to control the money flowing to individual employees.

In fact, with the state ultimately responsible for the retirement costs of its employees — which are proving to be much higher than initially planned — paying current employees multiple times their salaries shifts more of the burden to the national tax bill, versus keeping more Rhode Islanders employed.