Tensions rising over cost of health care
Globe Staff / August 12, 2011
Unions have targeted the health care sector as a rare arena for expansion in recent years. But with Massachusetts hospitals growing increasingly cost conscious in a weakened economy, friction between management and organized labor is becoming more common.
Members of the Massachusetts Nurses Association, who thought they had negotiated a more favorable retirement plan last October at four Caritas Christi Health Care hospitals, now find themselves at loggerheads with the hospitals’ new owner, Boston’s Steward Health Care System LLC, about putting in place terms of a plan the parties agreed to last fall.
Across the state, Local 1199 of the Service Employees International Union has called on Baystate Health of Springfield to scrap plans to eliminate 354 jobs at the end of next week, arguing the hospital’s projected budget shortfall will be offset by a Medicare windfall.
Those clashes, following the nurses union’s contentious contract bargaining last spring at Tufts Medical Center in Boston and St. Vincent Hospital in Worcester, underscore a new – more tense – environment as unions and hospitals stake their positions.
“Health care has become a higher priority for the union movement, and Massachusetts unions have become part of more aggressive national unions,’’ said Stuart H. Altman, professor of national health policy at Brandeis University in Waltham, who sits on the Tufts Medical Center board. “On the other side is the pressure on hospitals to cut costs at the same time the unions are asking for more.’’
The friction is only part of the story. Hospitals and unions have worked together on some issues. Local 1199 teamed up with the Massachusetts Hospital Association, for instance, to sponsor a rally on Beacon Hill last month to protest anticipated federal health care cuts.
Steward’s chief executive, Ralph de la Torre, enlisted the aid of unions last year as he sought regulatory backing for Steward’s corporate parent, Cerberus Capital Management, to buy the financially struggling Caritas Christi chain of Catholic community hospitals.
Just before that deal was approved, members of the Massachusetts Nurses Association ratified a new five-year contract at St. Elizabeth’s Medical Center in Brighton, Carney Hospital in Dorchester, and two other Caritas hospitals. The pact gave nearly 1,700 registered nurses pay raises and a so-called “defined benefit’’ pension plan that replaced a 403(b) defined contribution plan, the nonprofit sector’s equivalent of a 401(k).
But now union leaders are charging that the pension plan Steward presented to them this year differed from what the parties agreed to, a charge Steward denies. Among several areas of dispute, the union faults Steward for seeking veto power over non-Steward hospitals that eventually might join the multiple-employer plan. The union also wants Steward to make pension contributions based on gross pay, including overtime, rather than base pay.
The dispute flared at a Tuesday night public hearing on Steward’s plan to buy the bankrupt Quincy Medical Center. Nurses union leaders, who support the sale, asked the state attorney general’s office, which must recommend approval, to hold up the deal until the pension matter is resolved. The parties are scheduled to enter arbitration next month.
“We want them to look at the language of our collective bargaining agreement before they finalize the sale,’’ said Julie Pinkham, executive director of the Canton-based nurses association. “We expect, and we hope, that the Quincy purchase will be approved.’’
Steward spokesman Chris Murphy, however, said postponing the Quincy hospital deal by tying it to pension arbitration talks could drive up the cost to Steward. “With the hospital in bankruptcy, any delay could jeopardize the existence of the hospital,’’ he said.
Murphy also said that Steward, while agreeing to the new pension plan, insisted that it be ’’revenue neutral,’’ meaning that it cost no more than what Caritas contributed to the previous retirement plan. And he said retaining veto power over other hospitals joining the new plan is prudent because Steward would be liable for the expense. “With the current economy and the current health care environment, everyone has to be very cost conscious,’’ he said.
Baystate Health, which operates Tufts-affiliated Bay State Medical Center and two other western Massachusetts hospitals, cited a projected $25 million budget shortfall when it disclosed last month that it planned to trim 354 jobs on Aug. 19. Local 1199, which does not represent Bay State employees but has 5,000 members in the Springfield area , issued a statement this week challenging the cutback.
Union leaders estimated that the hospital will collect $17 million in additional federal funding as early as this fall, partly offsetting the budget shortfall. The windfall will come from a provision in the new national health care law that will bring more than $275 million extra to all Massachusetts hospitals. Baystate has not confirmed the union’s number nor said if they plan to go forward with the job reductions.
“You can’t ignore 354 layoffs from the largest private employer in western Massachusetts,“ said Jeff Hall, a spokesman for Local 1199.
Health care unions have been flexing their muscles at other sites across the country at a time when hospitals have been consolidating and face diminishing revenue from states and the federal government in coming years.
“In a severely resource-constrained environment, where significant costs need to be taken out of all health care systems, it’s become more difficult for the unions to show they can be value-added,’’ said Marc A. Bard of Navigant Consulting.
Robert Weisman can be reached at weisman@globe.com.
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