Hospitals paying $24 billion more for labor during the COVID-19 pandemic

https://www.healthcarefinancenews.com/news/hospitals-paying-24-billion-more-labor-during-covid-19-pandemic

Clinical labor costs are up by an average of 8% per patient day, translating to $17 million in additional annual labor expenses.

As the delta variant pushes COVID-19 caseloads to all-time highs, hospitals and health systems across the country are paying $24 billion more per year for qualified clinical labor than they did pre-pandemic, according to a new PINC AI analysis from Premier.

Clinical labor costs are up by an average of 8% per patient day when compared to a pre-pandemic baseline period in 2019. For the average 500-bed facility, this translates to $17 million in additional annual labor expenses since the beginning of the public health emergency.

The data also shows that overtime hours are up 52% as of September. At the same time, the use of agency and temporary labor is up 132% for full-time and 131% for part-time workers. The use of contingency labor – positions created to complete a temporary project or work function – is up nearly 126%.

Overtime and the use of agency staff are the most expensive labor choices for hospitals – usually adding 50% or more to a typical employee’s hourly rate, Premier found.

And hospital workers aren’t just putting in more hours – they’re also working harder. The analysis shows that productivity, measured in worked hours per unit of departmental volume, increased by an average of 7% to 14% year-over-year across the intensive care, nursing and emergency department units, highlighting the significance of the increases in cost-per-hour.

Another complicating factor is that hospital employees are more exposed to COVID-19 than many other workers, with quarantines and recoveries requiring the use of sick time. The data shows that use of sick time, particularly among full-time employees (FTEs) in the intensive care unit, is up 50% for full-time clinical staff and more than 60% for part-time employees when compared with the pre-pandemic baseline.

WHAT’S THE IMPACT

The combined stressors of working more hours while under the constant threat of coronavirus exposure are pushing many hospital workers to the breaking point. In fact, the data shows clinical staff turnover is reaching record highs in key departments like emergency, ICU and nursing. 

Since the start of the pandemic, the annual rate of turnover across these departments has increased from 18% to 30%. This means nearly one-third of all employees in these departments are now turning over each year, which is almost double the rate from two years ago.

This is a number that could increase as new vaccination mandates take effect. Already, one Midwestern system reported a loss of 125 employees who chose not to be vaccinated, while a New York facility reported another 90 resignations. Overall, staffing agencies are predicting up to a 5% resignation rate once vaccine mandates kick in. 

While a minority of the overall workforce, losses of even a few employees during times of extreme stress can have a ripple effect on hospital operations and costs.

THE LARGER TREND

According to the American Hospital Association, hospitals nationwide will lose an estimated $54 billion in net income over the course of the year, even taking into account the $176 billion in federal CARES Act funding from last year. Added staffing costs were not addressed as part of CARES and are further eating into hospital finances. 

As a result, some are now predicting that more than half of all hospitals will have negative margins by the end of 2021 – a trend that could be dire for some community hospitals. 

Prior to the pandemic, about one quarter of hospitals had negative margins, the Kaufman Hall data showed. At the beginning of 2021, after almost a year of COVID-19, half of hospitals had negative margins.

Meanwhile, the most potentially disruptive forces facing hospitals and health systems in the next three years are provider burnout, disengagement and the resulting shortages among healthcare professionals, according to a March survey of 551 healthcare executives.

Are recent labor actions getting nursing unions what they want?

While nurses in Cook County, Illinois, struck a deal in recent days, those on a three-month-plus strike against a Tenet hospital in Massachusetts plan a protest at the chain’s Dallas headquarters.

Thousands of healthcare workers have waged strikes this summer to demand better staffing levels as the pandemic brought greater attention to what happens when a nurse must take care of more patients than they can reasonably handle.

In New York, a report from the attorney general that found nursing homes with low staffing ratings had higher fatality rates during the worst COVID-19 surges last spring helped spur legislators to pass a safe staffing law long-advocated for by the New York State Nurses Association.

While unions elsewhere face a steeper climb to win the success found in New York, through strikes and other actions, they’re attempting to get new staffing rules outlined in their employment contracts.

Most nursing strikes include demands for ratios, or limits on the number of patients a nurse can be required to care for, Rebecca Givan, associate professor in the School of Management and Labor Relations at Rutgers University, said.

“And employers are very anxious about that because it threatens their bottom line, so often when a compromise is found, it’s something that approaches a ratio but maybe has a bit more flexibility,” Givan said.

Some have been successful, like the 1,000 Chicago-area nurses at Stroger Hospital, Provident Hospital and Cook County Jail who waged a one-day strike on June 24 after negotiating with the county over a new contract for nearly eight months.

They reached a tentative agreement shortly after the strike, stipulating the hiring of 300 nurses, including 125 newly added positions throughout the system within the next 18 months.

The deal also includes wage increases to help retain staff, ranging from 12% to 31% over the contract’s four-year term, according to National Nurses United.

Meanwhile, 700 nurses at Tenet’s St. Vincent Hospital in Worcester, Massachusetts, have been on strike for over 100 days over staffing levels. Nurses represented by the Massachusetts Nurses Association have been trying to get an actual nurse-to-patient ratio outlined for specific units in their next contract.

The two sides haven’t come close to reaching a deal yet, and some nurses will travel to Tenet’s headquarters in Dallas on Wednesday in an attempt to appeal to corporate executives, according to MNA.

At the same time, federal lawmakers wrote to Tenet CEO Ron Rittenmeyer seeking details on the chain’s use of federal coronavirus relief funds amid the strike and alongside record profits it turned last year.

The hospital denied lawmakers’ claims in the letter that Tenet used federal funds to enrich executives and shareholders rather than meet patient and staff needs, saying in a statement it strongly objects to the “mischaracterization of the facts and false allegations of noncompliance with any federal program.”

The strike is currently the longest among nurses nationally in a decade, according to the union.

A number of other major hospital chains have contracts covering their nurses expiring this summer, including for-profit HCA Healthcare and nonprofit Sutter Health.

Unionized nurses at 10 HCA hospitals in Florida have reached a deal on a new collective bargaining agreement, though members still need to ratify it, according to National Nurses United. The details are still unclear.

And after joining NNU just last year, 2,000 nurses at HCA’s Mission Hospital in Asheville, North Carolina, ratified their first contract Saturday, which includes wage increases and the formation of a nurse-led staffing committee.

Newly-formed unions take an average of 409 days to win a first contract, according to an analysis from Bloomberg Law. In the healthcare industry, new unions take an average of 528 days to win a first contract, the longest among all sectors examined.

Across the country at Sutter’s California hospitals, disputes haven’t been so easily resolved. Healthcare workers at eight Sutter hospitals planned protests throughout July “to expose the threat to workers and patients caused by understaffing, long patient wait times and worker safety issues at Sutter facilities,” according to Service Employees International Union United Healthcare Workers West, which represents the workers.

Similar to the ongoing Tenet hospital strike, SEIU is highlighting Sutter’s profits so far this year and the federal relief funds it received.

Show Me the Money

DevOps for Defense

How much transparency is too much?

That’s the question business leaders are facing after Colorado lawmakers passed a bill requiring companies to post salary ranges for open or remote work positions in the state. California, Connecticut, Maryland, and Washington already have laws on the books mandating companies provide pay ranges to candidates who specifically ask for them or during an offer. The Colorado law takes it one step further by making companies proactively disclose the minimum and maximum salary as part of the job posting.

Though Colorado is the first state to make salary ranges available to any applicant, it won’t be the last, says Benjamin Frost, a solutions architect in Korn Ferry’s Products business. The wind is clearly blowing in the direction of this becoming commonplace,” he says. Investors and employees want more transparency from companies, particularly around diversity, equity, and inclusion. Moreover, supporters argue providing salary ranges up front can help companies better match candidates to positions, making the hiring process more efficient.

But some companies, already under increasing wage pressure brought on by the hiring boom, apparently don’t see it that way: some recent job listings have specifically excluded candidates who live in Colorado from certain open positions. Frost says the move is less about Colorado’s talent pool and more about losing negotiating power with talent overall. “Excluding Colorado workers seems like a decent price to pay for not needing to disclose salary ranges at the moment,” he says. By contrast, he says, if and when a state like New York or California takes the step toward proactive disclosure, it will be a much bigger deal: “It is about talent pools and where companies can and can’t afford to close off access.”

Human resources leaders also argue that proactively providing pay ranges will actually make the recruiting process less, rather than more, efficient. For one, designating a salary range is tricky business. “You don’t want to limit the talent you get to look at,” says Andy De Marco, Korn Ferry’s vice president of human resources for the Americas. At the time, the range can be so broad that it could become arbitrary. A span of $100,000, for instance, expands the candidate pool and skills spectrum so much that it could slow down recruiting and, by extension, operations.

Excluding applicants from Colorado for now might give companies more time to clean up their pay practices, says Tom McMullen, a Korn Ferry senior client partner and a leader in the firm’s Total Rewards practice. He notes that posting pay ranges could expose internal inequities leaders aren’t yet prepared to deal with. For instance, suppose a company posts a range of $80,000 to $100,000 for a role, but an existing employee is still earning the minimum number after five years with the firm. “How upset will that employee be after seeing this posted range?” asks McMullen.

To be sure, optics are a huge part of the disclosure calculus for leaders. McMullen says companies are running out of time to institute fairer pay practices on their own before regulators push them to do so. “Employees will give their leaders credit for making these changes proactively,” he says.

A “perfect storm” is brewing in the healthcare workforce

https://mailchi.mp/bade80e9bbb7/the-weekly-gist-june-18-2021?e=d1e747d2d8

Plastic Possibilities: Resin Production Meets the Perfect Storm |  plasticstoday.com

A topic that’s come up in almost every discussion we’ve had with health system executive teams and boards recently is workforce strategy. Beyond the immediate political debate about whether temporary unemployment benefits are exacerbating a shortage of workers, there’s a growing recognition that the healthcare workforce is approaching something that looks like a “perfect storm”.

The workforce is mentally and physically exhausted from the pandemic, which has taken a toll both professionally and personally. Many workers are rethinking their work-life balance equations in the wake of a difficult year, during which working conditions and family responsibilities shifted dramatically. That, along with broader economic inflation, is driving demands for higher wages and a more robust set of benefits.

Meanwhile, many health systems are shifting into cost-cutting mode, due to COVID-related shifts in demand patterns and continued downward pressure on reimbursement rates, forcing a renewed focus on workforce productivity.

These combined forces threaten to create a negative spiral, which could lead to even worse shortages and deteriorating workplace engagement. It’s striking how quickly the “hero” narrative has shifted to a “crisis” narrative, and we agree completely with one health system board member who told us recently that workforce strategy is now the number one issue on his agenda.

No easy answers here, but we’ll continue to report on innovative approaches to addressing these difficult challenges.

Johns Hopkins hikes minimum wage for more than 6,300 workers in Florida, Maryland

Johns Hopkins Plan To Boost Minimum Wage To $15 An Hour

Johns Hopkins University and Johns Hopkins Health System, both based in Baltimore, are boosting their minimum wage to $15 per hour, they said May 6.

The change will take effect July 1, in accordance with annual pay increases for university employees. For health system employees, including more than 300 at Johns Hopkins All Children’s Hospital in St. Petersburg, Fla., the change will take effect Jan. 1.

“Moving to a $15 minimum wage recognizes the hard work and sacrifices Hopkins employees make every day to advance our mission and serve our patients,” Johns Hopkins Health System President Kevin Sowers said in a news release. “We are proud to announce our adoption of a $15 per hour minimum wage even sooner than planned.”

Johns Hopkins said the minimum wage boost includes full-time temporary workers, student workers and contract employees. 

Overall, the increase affects more than 6,000 Maryland workers, in addition to the more than 300 Johns Hopkins All Children’s workers in Florida. 

Tenet California hospital workers set May 6 union rally after shareholders meeting

South California healthcare workers plan payment, safety protest during Tenet  Healthcare investor meeting | FierceHealthcare

Workers at three Tenet Healthcare hospitals in Southern California will hold a rally May 6 to highlight their concerns about staffing, wages and benefits during the COVID-19 pandemic, according to the union that represents them. 

The rally comes as the National Union of Healthcare Workers is in negotiations with Dallas-based Tenet for more than 600 direct Tenet employees at Fountain Valley Regional, including respiratory therapists, nursing assistants and X-ray technicians. The union is also in negotiations with the Compass Group, a food and support services provider, for about 225 housekeepers and food service workers at Tenet California hospitals in Fountain Valley, Los Alamitos and Lakewood, who are subcontracted by Tenet and employees of Compass.

Union spokesperson Matt Artz told Becker’s workers contend Tenet has remained profitable during the pandemic, but it did not implement appropriate safety measures. He said Tenet also rejected proposals to better staff certain units, and it has rejected the union’s proposal to stop subcontracting out the housekeepers and food service workers who have struggled to afford healthcare.

The union said Tenet, a major for-profit hospital operator, has the financial means to address these issues. The company reported a $97 million profit in the first quarter of 2021. Tenet stock also recently hit a new 52-week high, according to an April 29 report from Zacks Equity Research. 

“These profits are not helping workers or patients,” Christina Rodriguez, a respiratory therapist at Fountain Valley (Calif.) Regional Hospital, said in a May 5 news release. “They’re being made at the expense of patient care and the people who have put their health on the line to help patients during this pandemic. At the height of the surge, I would go home crying that we didn’t have enough staff to help patients struggling to survive.”

Tenet contends the issue is not about Tenet but rather about negotiations between Compass and the union. Tenet said it is focused on staff and patients. 

“This matter is not about us. It’s about a negotiation strictly between the NUHW and the Compass Group, which is a vendor that provides a range of food, laundry and other support services to hospitals,” Tenet told Becker’s. “At all times, our main concern is the safety of our staff, the integrity of our facilities and the best possible outcomes for our patients, and we remain hopeful that the NUHW and Compass will reach a positive outcome at the conclusion of their respective negotiations.”

But the union said Tenet can decide whether to bring the subcontracted housekeepers and food service workers in-house, which would benefit them in terms of wages and health benefits. 

Meanwhile, Compass said it will continue to negotiate in good faith, with union members.

“Our hardworking team members are at the heart of what we do, and their determination to provide best-in-class care and service is inspiring,” a Compass spokesperson told Becker’s. “We take pride in paying competitive wages and providing affordable benefits and continue to uphold our agreement with the NUHW. We have a long history of listening to our employees, working productively with unions, and will continue to meet and negotiate — always in good faith.” 

Respiratory therapists, housekeepers, nursing assistants, medical technicians, dietary workers and others represented by the union said they plan to rally from 11 a.m. to noon May 6 outside Fountain Valley Regional. 

The rally, scheduled after Tenet’s shareholders meeting, includes workers from Los Alamitos (Calif.) Medical Center and Lakewood (Calif.) Regional Medical Center. Union workers whose jobs are subcontracted to Compass will speak during the rally, the union said. 

Twenty states raise minimum wage at start of new year

https://thehill.com/policy/finance/532279-twenty-states-raise-minimum-wage-at-start-of-new-year?rnd=1609675645

These 20 states will raise their minimum wage by January 1 - WRCBtv.com |  Chattanooga News, Weather & Sports

Twenty states and dozens of localities increased their minimum wage on Friday, giving a financial boost to many frontline workers during the pandemic.

New Mexico will see the largest jump, adding $1.50 to its hourly minimum and bringing it up to $10.50. Arkansas, California, Illinois and New Jersey will each increase their minimum wages by $1.

Alaska, Maine and South Dakota will increase wages by just 15 cents an hour, while the rate in Minnesota will rise by half that, at 8 cents, to $10.08 an hour.

Additional increases are scheduled for elsewhere this year, with most changes taking effect on July 1.

Low-income earners, like much of the country’s workforce, have seen their wages remain relatively stagnant for decades when inflation is taken into account. Proponents say the new raises will help reduce poverty and offer much-needed pay hikes to some of the most vulnerable workers.

“Minimum wage increases income levels, reduces poverty, so I think it’s pretty clear that it improves conditions in the lower end of the wage distribution,” said Daniel Kuehn a research associate at The Urban Institute.

Localities are also boosting their minimum pay. Flagstaff, Ariz., will see wages rise from $13 an hour to $15, as will Burlingame, Calif

In some municipalities, the increases are dependent on business size. Hayward, Calif., for example, will follow the same wage hike as Burlingame, but employers who 25 or fewer workers will need to raise wages from $12 an hour to $14.

Varying minimum wages across localities, Kuehn said, lets governments take into account different cost-of-living conditions.

“I think the ideal policy would include a lot of local variation, but that doesn’t mean a federal floor isn’t helpful,” he said.

The federal minimum wage has been stuck at $7.25 since 2009. In recent years, the goal of a $15 minimum wage has become a standard progressive policy.

House Democrats in July 2019 passed a bill that would gradually increase the federal minimum wage to $15 gradually through 2025, but the measure died in the GOP-controlled Senate.

“While families work hard to make ends meet, their cost of living has surged to unsustainable highs, inflation has eaten nearly 20 percent of their wages and the GOP’s special interested agenda has left them behind,” Speaker Nancy Pelosi (D-Calif.) said at the time.

“No one can live with dignity on a $7.25 an hour wage,” she added.

The issue is back in the political spotlight again with Tuesday’s runoff elections in Georgia that will determine which party controls the Senate for the next two years.

The Democratic challengers are arguing that the federal minimum wage will only increase if they win both races.

“If the federal minimum wage kept up with the cost of living, it would be even higher than $15,” Democratic candidate Jon Ossoff said last week. “The basic premise is that anybody in this country working a single full-time job should be bringing home enough money to sustain themselves and then some.”

But critics argue that minimum wage increases could slow job growth by raising labor costs for employers, an issue of particular concern during the fragile recovery from the coronavirus recession.

“A dramatic increase in the minimum wage even in good economic times has been shown to be harmful,” said Michael Saltsman, the managing director for the Employment Policy Institute, a think tank tied to the restaurant and hospitality industry.

“In the current climate, for many employers it could be the final nail in the coffin,” he added.

Saltsman argued that increasing anti-poverty programs such as the Earned Income Tax Credit are better policies than wage increases. The tax credit essentially operates as a government subsidy for low-wage work, shifting the onus of paying the extra wages from businesses to taxpayers.

Kuehn said there is little evidence to suggest that small and gradual increases of the minimum wage have significant effects on employment.

“The minimum wage increase levels we see get passed are not large enough to have significant employment effects,” he said.

But he concedes that it’s harder to predict the effects of a quick nationwide boost toward $15.

“I think it’s important to note that since we’ve never had a federal increase of that magnitude, there’s a lot we don’t know,” he said. “With something of that size, you would worry about low-wage places like Mississippi or Alabama.”

A report from the nonpartisan Congressional Budget Office in 2019 projected that a gradual increase to $15 through 2025 would mean “1.3 million workers who would otherwise be employed would be jobless in an average week in 2025.”

But it also specified a range of possible outcomes, including no job losses on the low end and as many as 3.7 million jobs lost on the high end.

The report found that 27 million people would see higher income, and that the poorest families would have wages rise as much as 5.2 percent.

Researchers such as Kuehn are adamant that businesses can handle increasing wages at moderate levels, even in the midst of a global health crisis.

“It certainly doesn’t make businesses’ lives easier, but businesses aren’t struggling right now because of wage costs,” he said.

“They’re hurting because of the pandemic.”