Valley Children’s executive pay called ‘excessive.’ Fresno councilmembers demand probe

After learning of the $5 milllion-plus annual compensation for the CEO of Valley Children’s Hospital, two Fresno City Councilmembers called a press conference to demand a state investigation into the nonprofit hospital’s finances.

The Madera County hospital’s federal tax forms show that CEO Todd Suntrapak’s total compensation increased beyond what is typical for the industry after the fiscal year ending Sept. 30, 2020, when his compensation was $2.1 million in salary and bonus. The following year, his total compensation from the hospital shot up to more than $5.5 million. The hospital’s latest available tax filings show his compensation at $5.1 million for the fiscal year ending Sept. 30, 2022.

The CEO also received a $5 million loan from the hospital that year, which the tax filing calls a “loan for residence as a retention incentive in lieu of other compensation.” The tax filing shows the hospital also has more than $124 million in investments in the Caribbean and Europe.

Valley Children’s is the largest children’s hospital between Los Angeles and San Francisco. For the past eight years, the nonprofit hospital has been recognized as one the nation’s best for children. According to its website, the hospital serves children inside a 45,000 square mile area, and more than 70% of those children are recipients of Medi-Cal, the state’s insurance program for low income people.

During the news conference, Fresno City Councilmembers Miguel Arias and Garry Bredefeld called on California Attorney General Rob Bonta to investigate how Valley Children’s is spending state dollars and blasted the hospital’s board for approving “exorbitant” salaries for Suntrapak and other executives.

“It’s a disgrace that the CEO and its executives are enriching themselves on the backs of sick and poor children,” Bredefeld said. “An absolute disgrace.”

Arias said a formal letter requesting an audit will be sent to Bonta and Assemblymember Jim Patterson, R-Fresno, who is a member of the Assembly’s Joint Committee on Legislative Audit.

The Attorney General’s Office did not immediately respond to a request for comment Wednesday.

Bredefeld called on the hospital’s Board of Trustees to “explain to the public” why such a high amount of money is going to its executives rather than toward the care of “sick and needy children.” He also called for an explanation from Fresno County District Attorney Lisa Smittcamp, who sits on the hospital’s board.

The Fresno Bee asked the hospital’s spokesperson, Zara Arboleda, for comment about the salaries and the call for a state investigation. She responded by forwarding a statement from Michael Hanson, chair of the hospital’s board.

”The Central Valley has built one of the nation’s premier children’s hospitals,” Hanson said in the statement. “In doing so, we have recruited and retained some of America’s best executives, caregivers and team members. As such, the quality of our care and the fiscal management of our organization is – and continues to be – best in class.”

Valley Children’s executive salaries compared to others

Your Valley Central, a news site for local NBC and CBS affiliates, reported Tuesday that the hospital used a third-party consultant to determine Suntrapak’s pay, and that the consultant was directed to place Suntrapak’s pay “among the top 10% of earners in his industry.”

“Their response to the excessive pay scandal makes it clear that they have prioritized profits and awarding executives to record billings of Medi-Cal and working families,” Arias said at Wednesday’s news conference.

The hospital’s tax filing for the fiscal year ending Sept. 30, 2022, shows Michelle Waldron, a senior vice president and advisor to Suntrapak, made nearly $2.9 million. Four other senior vice presidents at the hospital made between $1 million and $1.9 million that year.

According to Becker’s Hospital Review, Valley Children’s is ranked 16th in size on its list of the nation’s 30 largest children’s hospitals. Suntrapak earned more money in the fiscal year ending Sept. 30, 2022, than the CEOs of two larger hospitals on the Becker’s list, Rady Children’s Hospital in San Diego and Children’s Hospital Los Angeles, according to those hospitals’ public tax filings for same fiscal year.

That year, Suntrapak also earned more than James Downing, CEO of St. Jude Hospital, which is known for its national fundraising campaigns through television commercials featuring children with cancer diagnoses.

The compensation increases under scrutiny took place after the COVID pandemic, prompting Arias and Bredefeld to wonder aloud how much pandemic relief money Valley Children’s received.

The hospital’s campus has expanded rapidly

Valley Children’s moved to Madera in 1998. Today, its campus on the southeast corner of Madera County, just across the San Joaquin River from north Fresno, spans almost 500 acres. It expanded rapidly from its 280-acre footprint five years ago. Last fall, the hospital also announced its plans to build retail space on 40-60 acres, which could include a grocery store, gym, restaurants and a hotel.

Suntrapak told The Bee in the fall that the hospital’s retail plans intend to provide another revenue stream – one that would be used to fund more treatment programs and hire more doctors and nurses. He said Medi-Cal payments do not provide a return that will cover its increasing operational costs in the long-term.

On Wednesday, Arias and Bredefeld spoke skeptically of the hospital’s retail plans and noted that Valley Children’s, while expanding rapidly, has “failed to expand health access in south Fresno,” beyond its Dakota Pediatrics clinic near Dakota Avenue and First Street.

“The pandemic demonstrated that the lack of health care access in these neighborhoods led to a record death rate,” Arias said. “As a result, the city had to step up and provide $10 million to open a new clinic in southeast and southwest Fresno. Where was Valley Children’s then?”

Nonprofit hospitals are required by law to assess their community’s health needs and develop a plan to fill those needs, according to the California Department of Health Care Access and Information. The Valley Children’s service area, according to its 2022 community needs assessment, includes Fresno, Kings, Kern, Madera, Merced, Stanislaus and Tulare counties.

In the fiscal year ending Sept. 30, 2022, the hospital donated more than $4.17 million to Central Valley non-profits, but more than 90% of that money was donated to its own medical group and health care foundation.

Public trust in the hospital

Arias and Bredefeld criticized the hospital for encouraging community members to raise money during Kids Day, an annual event where volunteers sell newspapers on the street to raise money for the hospital. The Fresno Bee is one of the sponsors for the hospital’s Kids Day.

The councilmembers said the high salaries amount to a violation of the public trust that Valley Children’s “has benefitted” from in its fundraising. Arias said the hospital will have to be completely transparent going forward in order to rebuild that trust.

“They need to be completely transparent and clear about what money was used, how it was documented, and whether they’re going to continue to pursue these profiteering agendas,” he said.