Despite being frontline healthcare workers, most Stanford residents were excluded from the first round of the health system’s COVID vaccine rollout in December 2020. The system ultimately revised its plan to include residents, but the delay damaged Stanford’s relationship with residents, adding momentum to the unionization movement. Meanwhile, Keck’s residents unanimously voted in favor of joining the union, aiming for higher compensation and greater workplace representation.
The Gist: While nurses and other healthcare workers in California, as in many other parts of the country, have been increasingly banding together for higher pay and better working conditions, physician residents and fellows contemplating unionization is a newer trend.
Physicians-in-training have historically accepted long work hours and low pay as a rite of passage, and have shied away from organizing. But pandemic working conditions, the growing trend of physician employment, and generational shifts in the physician workforce have changed the profession in a multitude of ways.
Health systems and training programs must actively engage in understanding and supporting the needs of younger doctors, who will soon comprise a majority of the physician workforce.
While healthcare workers battle burnout, hospitals have been ramping up wages and other benefits to recruit and retain workers. It has created a culture of competition among health systems as well as travel agencies that offer considerably higher pay.
But other healthcare organizations are not hospitals’ only competitors. Some hospitals, particularly those in rural areas, are struggling to match rising employee pay among nonindustry employers such as Target and Walmart.
“We monitor and we’ve been looking and we ask around in the community and we can ask who’s paying what,” Troy Bruntz, CEO of Community Hospital in McCook, Neb., told Becker’s. “So we know where Walmart is on different things, and we’re OK. But if Walmart tried to match what Target’s doing, that would not be good.”
At Target, the hourly starting wage now ranges from $15-$24. The organization is making a $300 million investment total to boost wages and benefits, including health plans. Starting pay is dependent on the job, the market and local wage data, according to NPR.
Walmart raised the hourly wages for 565,000 workers in 2021 by at least $1 an hour, The New York Times reported. The company’s average hourly wage is $16.40, with the lowest being $12 and the highest being $17.
Meanwhile, Costco raised its minimum wage to $17 an hour, according to NPR. The federal minimum wage is $7.25.
Estimated employment for healthcare practitioners and technical occupations is 8.8 million, according to the latest data released March 31 by the U.S. Bureau of Labor Statistics. This includes nurse practitioners, physicians, registered nurses, physician assistants and respiratory therapists, among others.
In sales and related occupations, estimated employment is 13.3 million, according to the bureau. This includes retail salespersons, cashiers and first-line supervisors of retail salespersons, among others.
While retail companies up their wages, at least one hospital CEO is monitoring the issue. Healthcare leaders weigh their options
Mr. Bruntz said rising wages among retailers is an issue his organization monitors. Although Target does not have a store in McCook, there is a Walmart, where pay is increasing.
“I was quoted a few months ago saying Walmart was approaching $15 an hour, and we can handle that,” Mr. Bruntz said. “But when it gets to $20 or $25, it’s going to be an issue.”
He also said he cannot solely increase the wages of the people making less than $15 or less than $25 because he has to be fair in terms of wages for different types of roles.
Specifically, he said he is concerned about what matching rising wages at retailers would mean for labor expenses, which make up about half of the hospital’s cost structure.
“I double that half, that’s 25 percent more expenses instantly,” Mr. Bruntz said. “And how is that going to ratchet to a bottom line anything less than a massive negative number? So it’s a huge problem.”
Clinical positions are not the only ones hospitals and health systems are struggling to fill; they are encountering similar difficulties with technicians and food service workers. Regarding these roles, competition from industries outside healthcare is particularly challenging.
This is an issue Patrice Weiss, MD, executive vice president and chief medical officer of Roanoke, Va.-based Carilion Clinic, addressed during a Becker’spanel discussion April 4. The organization saw workforce issues not just in its clinical staff, but among environmental services staff.
“When you look at what … even fast food restaurants were offering to pay per hour, well gosh, those hours are a whole lot better,” she said during the panel discussion. “There’s no exposure. You’re not walking into a building where there’s an infectious disease or patients with pandemics are being admitted.”
Amid workforce challenges, Community Hospital is elevating its recruitment and retention efforts.
Mr. Bruntz touted the hospital as a hard place to leave because of the culture while acknowledging the monetary efforts his organization is making to keep staff.
He said the hospital has a retention program where full-time employees get a bonus amount if they are at the employer on Dec. 31 and have been there at least since April 15. Part-time workers are also eligible for a bonus, though a lesser amount.
“It also encourages staff [who work on an as-needed basis] to go part-time or full-time, and [those who are] part-time to go full-time,” Mr. Bruntz said. “That’s another thing we’re doing is higher amounts for higher status to encourage that trend.”
Additionally, Community Hospital, which has 330 employees, offers a referral bonus to staff to encourage people they know to come work with them.
“We want staff to bring people they like. [We are] encouraging staff to be their own ambassadors for filling positions,” Mr. Bruntz said.
He said the hospital also will offer employees a sizable market wage adjustment not because of competition from Walmart but because of inflation.
Graham County Hospital in Hill City, Kan., is also affected by the tight labor market, although it has not experienced much competition with retail companies, CEO Melissa Atkins told Becker’s. However, the hospital is struggling with competition from other healthcare organizations, particularly when it comes to patient care departments and nursing. While many hospitals have struggled to retain employees from travel agencies, Graham County Hospital has mostly been able to avoid it.
“As the demand increases, so does the wage,” Ms. Atkins said. “In addition to other hospitals offering sign-on bonuses and increased wages, nurse agency companies are offering higher wages for traveling nurse aides and nurses. We are extremely fortunate in that we have not had to use agency nurses. Our current staff has stepped up and filled in the shortages [with additional incentive pay].”
To combat this trend, the hospital has increased hourly wages and shift differentials, as many healthcare organizations have done. It has also provided bonuses using COVID-19 relief funds.
Overall, Mr. Bruntz said he prefers “not to get into an arms race with wages” among nonindustry competitors.
“It’s not going to end well for anybody. We prefer not to use that,” he said. “At the same time, we’re trying to do as much as possible without being in a full arms race. But if Walmart started paying $25 for a door greeter and cashier, we would have to reassess.”
Companies that fail to adjust to labor shortages and satisfy the growing demands of workers will likely falter as they lose the battle for talent, BlackRock CEO Larry Fink said in a letter to CEOs.
“No relationship has been changed more by the pandemic than the one between employers and employees,” Fink said, noting that “employees across the globe are looking for more from their employer — including more flexibility and more meaningful work.” Fink, while leading the world’s largest asset manager, has sought for a decade to influence corporate behavior through an annual CEO letter.
“As companies rebuild themselves coming out of the pandemic, CEOs face a profoundly different paradigm than we used to,” Fink said. Companies can no longer overlook employee mental health, insist that staff work in the office five days per week and provide modest wage increases for low- and middle-income workers.
CFOs considering an increase in prices and employee wages need to balance the imperative to sustain profits with pressures from the worst inflation and labor shortages in decades.
The persistence of COVID-19 has slowed the labor market’s post-lockdown recovery and churned up company payrolls. Fink noted that in November the quits rate, or the number of workers who left their jobs as a percent of total employment, rose to 3%, a record high first breached in September.
CFOs aiming to attract and retain employees with wage increases must take into account a 7% jump in the consumer price index (CPI) during the 12 months through December — the biggest surge since 1982.
“Workers demanding more from their employers is an essential feature of effective capitalism,” Fink said. Describing “a new world of work,” he said, “companies not adjusting to this new reality and responding to workers do so at their own peril.
“Turnover drives up expenses, drives down productivity and erodes culture and corporate memory,” Fink said. BlackRock manages more than $10 trillion in assets for institutional and retail investors.
In order to satisfy workers, CEOs must look beyond pay and workplace flexibility, Fink said. The coronavirus “shone a light on issues like racial equality, childcare and mental health — and revealed the gap between generational expectations at work.”
Fink also reiterated his support for “stakeholder capitalism,” saying that “a company must create value for and be valued by its full range of stakeholders in order to deliver long-term value for its shareholders.”
“Stakeholder capitalism is not about politics. It is not a social or ideological agenda. It is not ‘woke,’” he said. “It is capitalism driven by mutually beneficial relationships between you and the employees, customers, suppliers and communities your company relies on to prosper.”
Most stakeholders expect companies to help “decarbonize” the global economy, Fink said, predicting that so-called sustainable investment will surge well beyond the $4 trillion total.
BlackRock has asked companies to set short-, medium- and long-term targets for greenhouse gas reductions which “are critical to the long-term economic interests of your shareholders,” he said.
At the same time, “divesting from entire sectors — or simply passing carbon-intensive assets from public markets to private markets — will not get the world to net zero,” Fink said, adding that “BlackRock does not pursue divestment from oil and gas companies as a policy.”
Fink’s annual letter drew fire from environmentalists.
The letter “is just another rehashing of the same vague rhetoric, without any meaningful new commitment to actually help lead the necessary transition to a climate-safe future,” Ben Cushing, the Sierra Club’s fossil-free finance campaign manager, said in a statement.
Workers at Pittsburgh-based UPMC plan to strike over wages and benefits, the Post-Gazette reported Nov. 5.
Service Employees International Union Healthcare Pennsylvania, which does not represent the workers but is supporting them, told Becker’s Hospital Review the strike would involve workers at UPMC hospitals in Pittsburgh, including transporters, dietary workers, housekeepers, nurses, patient care techs, medical assistants, pharmacy techs, surgical techs, valets, therapists, health unit coordinators and administrative assistants. Workers plan to strike for one day on Nov. 18.
The workers are demanding a $20 per hour minimum wage, affordable high-quality healthcare, elimination of all medical debt and respect for union rights, according to a union news release.
Their strike notice came after UPMC announced Nov. 2 that the health system is giving 92,000 staff members a bonus of $500 to thank them for their work during the pandemic. UPMC will issue the bonuses on Nov. 26. The health system also announced improvements to employee compensation and benefit programs, including raising the entry level wage to $15.75 in January, according to the Post-Gazette.
“There was no ‘thank you pay’ until we started organizing to strike,” Juilia Centofanti, pharmacy tech at UPMC Children’s Hospital of Pittsburgh, said in a news release.
Ms. Centofanti added that employees are “owed this [$20 per hour wage] and so much more,” and said she “will continue organizing with my co-workers for the pay, safer staffing and union rights we deserve.”
In announcing the bonuses, Leslie Davis, president and CEO of UPMC, told workers, “Over the past 20 months, you have risen in truly exceptional ways to meet challenges we could have never anticipated. With your critical support, UPMC continues to care for so many.”
A UPMC spokesperson declined to comment to Becker’s on Nov. 5.
UPMC is a $23 billion healthcare provider and insurer. SEIU Healthcare Pennsylvania has been trying to organize about 3,500 hourly workers at UPMC Presbyterian and Shadyside hospitals for nearly a decade, but has not yet held a unionization vote, according to the Post-Gazette.
Hospitals’ performances declined “by almost every metric” during September as volumes dropped, average patient stays rose and expenses increased “dramatically” due to labor and supply chain issues, Kaufman Hall wrote in its latest monthly report.
Although revenue increased compared to this time last year, the industry analyst said that these pressures have led median change in hospital operating margin to decline 18.2% from August to September, not including CARES act funding.
These declines were greatest across regions heavily affected by the recent delta surge, with the west part of the country seeing the largest year-over-year drop in its median change in operating EBITDA margin (38%), Kaufman Hall wrote.
Hospital size also played a role in margin performance, they wrote, with hospitals containing more than 500 beds seeing year-over-year declines of 36% while those with 25 or fewer beds actually seeing their margins increase year over year.
Adjusted discharges dropped 5.1% month over month but remained up 11.4% year over year. Patient days similarly dropped 1.4% month over month, “reflecting a decrease in COVID-19-related hospitalizations,” but are still up 11.4% year over year, according to the report. Notably, the average length of stay saw increases across the board—0.7% month over month and 4.8% year over year.
Expenses and revenues continued their hand-in-hand climb during September.
For the former, total expenses grew 2.2% month over month and 11.2% year over year. Labor expenses increased 1.4% month over month at the same time as workers per patient bed declined, the group wrote. Other non-labor expenses, including drugs and medical supplies, also saw a 1.3% month-over-month increase.
“Multiple factors are contributing to alarming and sustained increases in hospital expenses,” Erik Swanson, a senior vice president of data and analytics with Kaufman Hall. “Growth in labor expenses are outpacing increases in hours worked, suggesting hospitals are paying more due to nationwide labor shortages. Rising supply and drug expenses also point to worldwide supply chain issues.”
Hospital revenues saw their seventh consecutive month of year-to-date increases when compared to 2020 and 2019 alike, “due in part to yearly rate changes and the continued rise in higher acuity cases,” Kaufman Hall wrote. Specifically, gross operating revenues minus CARES grew 12.3% year over year from 2020 and 12.3% year over year from 2019, with inpatient revenue rising faster than outpatient revenue.
Month over month was a different story, however, with gross operating revenue without CARES dropping 1.4%. While inpatient revenue was up 1.5% from August, a 3.3% decline in outpatient revenue “suggests that consumer worries about accessing care during the recent delta surge have led to another downswing,” Kaufman Hall wrote.
Kaufman Hall’s reports incorporate data from more than 900 U.S. hospitals. The September numbers follow early warnings of delta-fueled recovery roadblocks from the group’s preceding monthly reports as well as recent hospital chain earnings calls highlighting high revenues, costs and COVID-19 patient counts.
As health systems look to address the “social determinants of health”, one obvious but often overlooked place to start is with their own employees. The left side of the graphic below shows forecasted employment growth and salaries across a range of healthcare occupations. Many of the fastest-growing healthcare jobs—including home health and personal aides, medical assistants, and phlebotomists—are among the lowest-paid.
Case in point: home health and personal care aides are among the top 20 fastest-growing occupations in the US, and median wage for these jobs is only about $12 per hour, or around 200 percent of the federal poverty level—well below the living wage in many parts of the nation. (Note that this analysis does not include support staff who are not healthcare specific, like custodial or dietary workers, so the number of low-wage workers at health systems is likely higher.)
Among of the many struggles lower-income healthcare employees face is finding affordable housing. Using fair market rent data from the US Department of Housing and Urban Development, the right side of the graphic shows that healthcare support workers, even at the 90th percentile salary level, struggle to afford rent in the majority of the 50 largest US metros areas. In particular, home health aides in the top decile of earners can only afford rent in 14 percent of major cities.
These disparities have caught the attention of lawmakers. The $400B in President Biden’s proposed infrastructure plan devoted to home healthcare for seniors includes tactics to increase the wages and quality of life for these caregivers. But as we await policy solutions, health systems should pay careful attention to issues of housing insecurity and other structural challenges facing their workers and look to increase wages and provide targeted support to these critical team members.