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 I. Organizational profile & union environment II. Contract negotiations III. Strike preparations IV. Outcome and return on investment 2 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. 3 I. Organizational Profile and Union Environment 4 Organizational Profile Philadelphia, PA 953 bed academic health system 3 hospitals 46,000 admissions 100,000 ED visits 8,000 employees 3 unions 5 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 6 Different Times…Higher Stakes 7 8 9 II. Contract Negotiations 10 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 11 Approach Engage multidisciplinary teams Analyze data Develop formal plans Synchronize timelines Communicate effectively Educate union 12 Negotiating Team Hospital administration University administration Human resources Internal counsel Outside labor counsel Support – financial administration 13 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 14 # 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 15 # 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 16 # 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 17 # 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 18 III. Strike Preparations Contract Ratification or Strike? Potential scenarios Contract ratification prior to expiration Contract expiration/preannounced strike 10-day notice Unannounced walkout 20 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 23 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 24 Security Jefferson Outside security firm Philadelphia Police US Marshall Service 25 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 26 27 28 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 29 Legal and Regulatory Prepared injunctions Emergency arbitration hearing Conducted management education Reviewed communication Hold union accountable for following laws Notification to DOH/Joint Commission 30 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? 31 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 32 Staffing Center Coordinate logistics for inbound staff Travel, hotel, meals, transportation Identification Health screening and immunizations Scheduling Record keeping Training with department managers 33 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 34 Rallies 35 36 IV. Outcome and ROI 37 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 38 ROI Cost of strike preparedness Legal fees Public relations firm Total Return – $262,000 $240,000 $36,000 $540,000 35 x initial investment 39 ETO OT hours per pay Before - 1,310 After - 591 Time off hours per pay Before - 5,887 After – 2,388 40 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 41