On Thursday July 7, 2011, Swedish’s chief financial officer Jeff Veilleux joined negotiations to present a more in-depth look at Swedish’s finances and answer questions from SEIU members, who have expressed doubt about the severity of Swedish’s finances and the concept of the “New Normal.” The Union expressed their appreciation of Swedish’s continued commitment to transparency and sharing data and financial information in a timely manner.
Data from The Advisory Board Company, a national, healthcare-specific research firm and Swedish-specific financial information was presented at the bargaining table to provide more background about Swedish’s financials and the current economic and industry environment.
For 2011 Swedish budgeted its operating income conservatively based on numbers from 2010 and factored in a deteriorating payor mix and continuing economic challenges. However, the actual operating income recorded thus far in 2011 is below expectations – further proof that the reality of the “New Normal” is not only here, but impacting Swedish faster than expected.
The following economic and industry changes have had a dramatic impact on Swedish:
- The recession
- Healthcare reform
- State and national deficits
- An aging population
- Changing payor mix
Each of these changes have contributed to the changing payor mix, which means Swedish is seeing fewer people covered by private insurance and more people that are covered by government insurance (Medicare and Medicaid), which pay Swedish much less (40 – 60%). According to The Advisory Board Company, this trend is expected to continue and by 2021 it is expected to deteriorate significantly, as shown in the graph below.
Inpatient Volume by Payer Class – Projected Deterioration
Swedish has and will continue to reduce expenses by increasing efficiencies; however this won’t be enough. We are looking to SEIU to collaborate with us to find their fair share of the $200 million savings we need to achieve over the next three years.
The two parties reached tentative agreements on extra hours of work and clean-up on letters of understanding in the existing contract. In addition, Swedish responded to the Union’s proposal on floating workgroups.
Several sub-committee meetings will take place next week. Bargaining will resume on Tuesday, July 19.
