Conversations

Joint Press Release

Minnesota Nurses Association and North Memorial Health Care, Park Nicollet Health Services, Children’s Hospitals and Clinics, Fairview Health Services, HealthEast Care System and Allina Health

On December 6, 2012, the MNA and North Memorial Health Care, Park Nicollet Health Services, Children’s Hospitals and Clinics, Fairview Health Services, HealthEast Care System and Allina Health have reached agreement on new three-year contracts which are being unanimously recommended by the MNA Negotiating Committee for ratification by the membership.

The new contracts will be effective from June 1, 2013 through May 31, 2016.

Minnesota Nurses Association and the Hospitals are pleased to have reached agreement on the contracts in early negotiations and will now be able to focus on continuing to provide excellent care to our patients.

Twin Cities hospitals and nurses represented by the Minnesota Nurses Association are negotiating a new, three-year contract. The negotiations are taking place about seven months before the contract expires on June 1. That’s unprecedented, and – if the talks are successful – a huge benefit for all parties, including the community.

The opportunity for success in these early negotiations is enhanced by a limited agenda. Twin Cities hospitals made a huge concession to promote an early settlement. The contract talks will focus only on wages for nurses. An agreement now would mean that MNA nurses working in Twin Cities hospitals will continue to be among the highest paid in the country.  The average hourly rate for an MNA nurse working in a Twin Cities hospital is more than $44. Annualized, this rate translates into a salary of more than $91,500. That’s based on actual earnings from a survey of payroll data at hospitals in the Allina Health, Children’s Hospitals and Clinics of Minnesota, Fairview, HealthEast, North Memorial and Park Nicollet systems. The Twin Cities hourly rate is significantly higher than the national level. According to the most recent Bureau of Labor Statistics data (2011), the average hourly rate for registered nurses nationally is $29.03.

Agreeing to early negotiations limited only to wages also means that the current benefit and pension programs for MNA nurses will remain without changes if a new three-year contract is reached. While that’s good news for nurses, it doesn’t change the reality that a new approach to retirement security is needed. This isn’t just an issue for hospitals and nurses, but for the country.

Conversations, new solutions needed

The problem with pensions is the same challenge facing Social Security. It’s a math problem. We are living longer than ever before. A baby born about the time Social Security was created could expect to live only to about age 64 – a year less than the retirement age originally set by the program. In other words, the expectation was that people would work a full career, then draw benefits for only a few years.

For hospitals, the economic reality of pensions is significant. The cost of the pensions as a percentage of payroll has grown from 6.4 percent in 2007 to an estimated 11.4 percent for 2013. That’s unsustainable over the long-term.

If early negotiations are successful, a new contract for MNA nurses that deals only with wages resolves some issues. It would avoid the uncertainty that comes with protracted negotiations and the threat of a possible strike.  It also avoids the time and energy that goes into conducting traditional negotiations. 

Hospitals, though, are operating in a demanding environment today. Those who pay for health care, including individuals, insurers and government programs, are demanding that hospitals and other health providers do more for less. Hospitals are achieving that goal. The cost of health care has risen by less than 4 percent over the past year, a remarkable contrast to the double-digit increases routinely seen over much of the past two decades. The dramatic slowdown is the result of fundamental changes in how health care is delivered, and Minnesota hospitals are leading the way by delivering that care with innovation. It’s a fact that Twin Cities hospitals are recognized among the best in the nation when it comes to quality care. 

Building on this success will require basic changes in the cost structure of hospitals and other health care providers. Quality care requires outstanding care providers. Attracting and retaining the best nurses, for example, has pushed full-time nursing salaries in Twin Cities hospitals to among the highest levels in the country.

If a fair settlement can be reached on a new three-year contract, we  are hopeful that nurses and their unions will join hospitals in finding new and better ways to address the other pressing issues challenging hospitals.

Working together to find fair solutions on managing costs, including pensions, will take time and patience. In the immediate future, though, the hospitals’ full commitment will be to reach an agreement in early negotiations. 

The decision by the Minnesota Nurses Association (MNA) to accept an offer of early negotiations with six Twin Cities Hospital Systems – Allina Health, Children’s, Fairview, HealthEast, North Memorial and Park Nicollet – is a new approach to contract talks.  The MNA and the hospitals have agreed to four critical provisions:

• Negotiations will begin now even though the current contract does not expire until June 1, 2013.
• Items for discussion will be limited to wages only. Agreement on wages and approval of the proposal by nurses and the hospitals will result in a new three-year contract (extending to 2016) between MNA and the hospitals.
• There is an absolute deadline of December 25, 2012, to reach agreement.
• If no agreement is reached before December 25, the MNA and the hospitals will return to traditional negotiations starting next spring.

There is a lot at stake for all of us – nurses, the hospitals, fellow employees and the communities we serve.  The following are some questions and answers on the negotiations and what early talks mean:

Q: Why begin negotiations now when the contract doesn’t expire until June 1, 2013?

A: Reaching early agreement and assuring labor peace is so important for the work we do as employees and organizations, and in caring for patients in the community.  In order to achieve this important goal and avoid the problems associated with the 2010 negotiations, we decided to try something new – a one-issue (wages only) negotiation that could be achieved quickly and without the animosity that often accompanies traditional bargaining.

Q: Why is there an absolute deadline of December 25 of reaching an agreement?

A: This is a new approach and we hope it succeeds. By concluding negotiations before December 25, 2012, we avoid all the uncertainty and cost that comes with protracted negotiations and the threat of a possible strike.  We also can avoid all of the time, energy and money that goes into conducting traditional negotiations.  Reaching agreement on a new three-year contract before December 25, 2012, would be a great benefit to our employees, our patients and our community.

Q: Why are negotiations limited to wages? 

A: Certainly there are other issues in the current contract that are problematic for the hospitals that we would like to negotiate. However, we made the significant concession to limit the contract negotiations to wages to reach agreement by December 25.   By having a limited agenda – one that focuses on wages only – we increase the likelihood that a new contract can be achieved early and without a costly labor dispute.  This should be important because everyone — employers, insurance companies and the government — is looking for ways to cut payments to hospitals.  Most importantly, it assures our patients they will continue to receive the high quality care they expect from Twin Cities hospitals.

Q: If the early talks fail, is a nurses’ strike more likely next summer?

A: We believe most nurses working in the Twin Cities Hospitals want to avoid a strike. Nurses and hospitals want to continue providing outstanding care for patients.  If an agreement isn’t reached by December 25, 2012, it will make negotiations more difficult because more issues will be at stake as we return to traditional bargaining. 

The Minnesota Nurses Association (MNA) has accepted an offer from six Twin Cities hospital systems — Allina, Children’s, Fairview, HealthEast, North Memorial and Park Nicollet – to conduct early negotiations on a new contract with nurses. The current contract with union nurses will expire June 1, 2013. 

The hospitals and MNA agreed to complete negotiations no later than Dec. 25, 2012. In order to achieve that ambitious goal, the hospitals and the MNA agreed to limit the negotiations to wages only. If an agreement is not reached by Dec. 25, the hospitals and MNA would return to the normal contract negotiations process and all terms of the contract could be up for consideration.

A statement from the Twin Cities hospitals said, “We believe early negotiations limited to wages would lead to a fair contract for our nurses and the peace of mind that comes with a fair settlement achieved without the distractions that can accompany protracted negotiations. Most importantly, an early settlement of the contract is in the best interests of the patients we all serve.”  

 

The first of the boomers started signing up for Medicare last year, and they are just the tip of the iceberg. It’s estimated that 10,000 boomers are reaching retirement age every day – as many as 79 million who will swell the rolls of the nation’s federal health program for older Americans.

It’s no wonder that the future of Medicare is one of the most contentious issues in this year’s presidential race. Both President Obama and Governor Romney promise to protect Medicare while putting it on more solid financial footing and each has accused the other of undermining the long-term viability of the program. That boomer iceberg runs deep.

Voters will sort out the accusations and promises when they go to the polls Nov. 6. While the outcome of the election remains very much in doubt, the debate over Medicare’s future is evidence of a very real trend already affecting Twin Cities hospitals. Both the Obama Administration and the Romney-Ryan ticket project $716 billion in Medicare cuts over the next 10 years. How do they achieve the reductions? Most of the cuts will come from payments to hospitals and other health providers.

Private payers – individuals, employers and insurers – also are demanding that hospitals deliver the same high quality care at lower costs. 

This is coming at a time when hospitals are managing patients who are older and dealing with more chronic illnesses than in years past. It also is coming when Minnesota hospitals are facing rapidly increasing costs for uncompensated care – the charity care provided by hospitals and the bills that go uncollected. According to the Minnesota Department of Health, uncompensated care has more than doubled since 2004. The year-to-year increase in uncompensated care has averaged more than 12 percent since the middle of the last decade.

The trends are showing up on hospitals’ balance sheets. A study published by the St. Paul Pioneer Press in June found that operating income for Twin Cities metro hospitals and clinics fell about 21 percent, from about $363 million during fiscal 2010 to about $288 million last year. Nationally, the Health Care Advisory Board reported that if things remain on the same path, operating margins for the typical hospital could fall as much as 19 percent over the next 10 years.

In the face of these realities, Moody’s Investors Services reported earlier this year that downgrades of the debt of not-for-profit hospitals outpaced upgrades by 32 percent.  Simply put, the cost of borrowing money for many hospitals will increase, adding further pressure on the bottom lines.

What does this mean? Hospitals have to provide care in ways that are smarter, more efficient and less expensive. And, they have to do it without compromising quality or safety.

Twin Cities hospitals are responding with innovative solutions. One example is RARE, Reducing Avoidable Readmissions Effectively. By working closely with patients to inform them in easy-to-understand language about their care needs after hospitalization, to carefully plan discharges and through other techniques, the goal is to reduce readmissions. The ambitious goals could save privately insured patients $30 million just by the end of this year, with more savings for Medicare and Medicaid. The first signs are that the program is succeeding.

Other efforts are underway and more are coming. Staffing models will have to be flexible to make sure that nurses and other caregivers are where they can be most effective and efficient. Wages and benefits for hospital employees will be subject to tight reins. And, of course, all this has to be done with an eye on continuing to deliver the highest quality, safest care. 

Make no mistake about it: These are challenging times for Twin Cities hospitals. But innovation will assure that Minnesotans will continue to receive the best care in the country. Hospitals will navigate around all the icebergs.