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Collective Bargaining in an Era of Healthcare Reform; How One System Saved $18 Million Through Negotiations. Brian Sweeney, RN, FACHE Vice President for Clinical & Support Services Joseph Anton, RN Vice President for Clinical & Support Services. Agenda.
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Collective Bargaining in an Era of Healthcare Reform; How One System Saved $18 Million Through Negotiations Brian Sweeney, RN, FACHE Vice President for Clinical & Support Services Joseph Anton, RN Vice President for Clinical & Support Services
Agenda • Organizational profile & union environment • Contract negotiations • Strike preparations • Outcome and return on investment
Objectives • Describe how to formulate a strike plan to strengthen your negotiating position and minimize revenue loss from a work stoppage. • Identify tactics to reduce operating expenses associated with a collective bargaining agreement. • Demonstrate how to assemble a negotiating team that will lead to optimal outcomes.
Organizational Profile • Philadelphia, PA • 953 bed academic health system • 3 hospitals • 46,000 admissions • 100,000 ED visits • 8,000 employees • 3 unions
Key Facts – District 1199c • Affiliate of National Union of Hospitals & Health Care Employees, AFSCME, AFL-CIO • 72,500 national/17,000 local/1,ooo Jefferson members • Experienced leadership team • Simultaneous negotiations with 4 hospitals • Previous strikes • Key positions: EVS, nursing assistants, transport sterile processing, nutrition, mail room & supply chain
Negotiation Objectives • Secure a realistic and responsible collective bargaining agreement given ACA • Maintain high quality care • Protect patients, visitors, and staff • Continue academic activities • Maintain image/reputation • Minimize revenue loss • Provide consistent messaging
Approach • Engage multidisciplinary teams • Analyze data • Develop formal plans • Synchronize timelines • Communicate effectively • Educate union
Negotiating Team • Hospital administration • University administration • Human resources • Internal counsel • Outside labor counsel • Support – financial administration
Starting Point • Total annual cost of contract = $52.5 million • Wages - $36 million • Health and welfare - $12 million • Pension - $3.9 million • Training/legal - $720,000
# 1 - Wages • Challenges: • Highest wages in marketplace • Payroll drives pension costs • Union will oppose anything reducing dues • Goals: • Preserve current workforce salaries • Two tiered wage structure
# 2 - Health and Welfare Benefits • Challenges: • Multi-employer plan • Most costly benefit • Rich plan with low co-pays • High ED utilization & low PCP engagement • Goals: • Maintain contribution rate for 30 months • Reduce benefit costs • Activate disease management
# 3 - Pension • Challenges: • Grossly underfunded • Freeze is best option • Limited options with federal requirements • $62 million withdrawal liability • Rate increase in 2014 • Goals: • Migrate to defined contribution plan • Develop hybrid alternative
# 4 - Earned Time Off (ETO) • Challenges: • Poor attendance • Paying OT to cover call outs • “Right” to use time • Implement for non-union employees first • Goals: • Migrate to ETO plan • Resolve other matters first
Contract Ratification or Strike? • Potential scenarios • Contract ratification prior to expiration • Contract expiration/pre-announced strike • 10-day notice • Unannounced walkout
Strike Preparations • Challenges: • Take firm position to reduce 1199C expenses, increasing likelihood of a strike • Uncertain when strike will occur • Goals: • Minimize disruptions to operations • Maintain security for patients, visitors, and staff • Maintain image/reputation through aggressive PR
Financial Implications of Strike • Strike estimated to cost $1.5 million for 8 weeks • Reduction of 1199C payroll helps offset expenses • Reduced admissions budget • Unable to quantify risk of PR/media exposure
Developing A Strike Plan • Confidential playbook • Formal written document • Multidisciplinary involvement • Clear written procedures with accountability • Set timelines
Replacement Staffing • Staffing plan - day 1-7 - internal • Redeploy non-clinical staff • Train within 7 days of contract expiration - visible • Staffing plan - day 8+ - external • Large, experienced national firm • Cost • Authorization to deploy • Logistics
Security • Jefferson • Outside security firm • Philadelphia Police • US Marshall Service
PR/Communications • Hired outside crisis communication firm • Developed tools for departmental managers – FAQs, progress reports • Trained spokespersons for media inquiries • Prepared statements for patients, media, & vendors • Monitored social media
Supply Chain • Verified vendors will deliver • Stockpiled medical/surgical supplies, pharmaceuticals, and office supplies • Secured refrigerated trailer for perishables • Identified off site depots for deliveries • Used undercover vehicles for deliveries
Legal and Regulatory • Prepared injunctions • Emergency arbitration hearing • Conducted management education • Reviewed communication • Hold union accountable for following laws • Notification to DOH/Joint Commission
Table Top Exercises • Test the plan • Did people read it? • Did we miss anything? • Are we ready? • Scenarios • Access to loading dock will be impeded for an extended period of time given an excessive number of protesters. • What is the alternate plan? • How is it implemented?
Labor Operations Center (LOC) • Leads implementation of the strike plan • Staffed 24/7 • Labor hotline • Monitor campus security • Coordinate deliveries, communication and staffing • Monitor media activity and coordinate response
Staffing Center • Coordinate logistics for inbound staff • Travel, hotel, meals, transportation • Identification • Health screening and immunizations • Scheduling • Record keeping • Training with department managers
Security Responsibilities • Demonstrate preparation to reassure patients/staff • Protect perimeter • Coordinate efforts with law enforcement • Videotape picket line activities to gather evidence • Provide executive protection • Escort employees and vehicles safely in and out
Results • Settled on July 1st at 3 am • Six year agreement • Health and welfare reopener in July 2014 • $18,609,304 million in savings over life of contract • Wages/pension- $12,391,486 • Health and welfare- $1,913,868 • ETO -$4,303,680
ROI Cost of strike preparedness - $262,000 Legal fees - $240,000 Public relations firm - $36,000 Total - $540,000 Return – 35 x initial investment
ETO • OT hours per pay • Before - 1,310 • After - 591 • Time off hours per pay • Before - 5,887 • After – 2,388
Lessons Learned • Engage operational leaders in negotiations and strike preparations • Link negotiations to strike preparations • Ensure preparations are visible • Be sure you are ready to take a strike! • Continue communication on terms after ratification • Understand role of other hospital settlements • After action review – we will do it again in 6 years