In order to ensure a thriving future for Swedish, SEIU must share part of the burden for reducing expenses over the next three years. Swedish presented three potential options to show areas where SEIU could identify opportunities to narrow the gap and reduce expenses over the next three years. Potential solutions include:
There are various ways that we can combine some of the suggested expense reduction ideas listed above. Swedish talked to Union representatives today about how to mix and match these different scenarios to come up with a solution that is fair for all who rely on Swedish – patients, employees and community.
- Limiting increases to the wage scale
- Holding step increases for 1 – 3 years
- Modifying the existing health care plan
- Increasing premium share for employees and dependents
- Fully developing a robust wellness plan
- Redesigning some elements of the existing health care plan
- Freezing the pension or keeping it as is
Swedish is proud to be a leader in employee wages and benefits. We are not proposing layoffs or base wage cuts as have many other hospitals and local employers. We are committed to continuing to be a leader in wages and benefits; however, in the “New Normal” we all need to make hard choices so that we can remain financially stable.
Economic Impact of SEIU’s Proposals Add at Least $160 Million at a Time When Swedish Needs to Save $200 Million
As Swedish looks to reduce expenses by $200 million over the next three years, SEIU has put forth proposals that add more than $160 million over that same amount of time. SEIU proposals include:
- SEIU’s economic (wages, premium pay, step increases) proposal adds more than $70 million
- The staffing proposal adds more than $84 million not including OR, Cath Lab, SVNS and EDs
- Floating proposal is still being analyzed but is expected to add significant costs
Margin Shrinking Faster than Expected
A few weeks ago we shared with you some data about our eroding margin. We just received our May financials, which show that we are below budget by $5.4 million or 3.6%. Our payor mix continues to deteriorate with May marking the fifth consecutive month of this downward trend. The most distressing piece of this news is our margin for May was just $187,000 or .01%. This means we barely broke even and as a reminder, our goal and a healthy margin for an organization like ours is 3%.
Unfortunately, these changes are not going away, this is the “New Normal.”
Swedish’s Eroding Margin March – April 2011
The Myth of the “Three I’s”
The Union continues to believe that the “Three I’s” are areas where Swedish can find additional savings, this is not true. Swedish has been transparent about its financial situation from the beginning. Here is more detail on the economic impacts of the “Three I’s.”
- Issaquah – It is anticipated that Issaquah will operate at a loss through 2014, the term of the next contract. Even if Issaquah exceeds all of our expectations it is only nine percent of Swedish’s operating volume.
- Investments – As a nonprofit, we must be responsible financial stewards of our investments. Our investments are critical to our financial standing, which is one of the most important things rating agencies look at when assessing our financial health. We are dedicated to being fiscally responsible stewards for the organization.
- Investors – We reviewed the data presented at the bond meeting and confirmed that what we told the ratings agencies the same thing we told you, there are many risks. We invite you to look at the data available through the Washington Healthcare Facilities Authority Revenue Bonds. In fact, there are 27 pages of identified risks facing Swedish many of these are the same risks we identified for you earlier, including:
- General economic conditions
- Indigent care
- Federal health care reform
- Costs and restrictions from government regulation
- Labor costs
- Pension and benefit funds
- Medicare / Medicaid
Looking Ahead
Bargaining will resume on Tuesday, June 28 and Thursday, June 30. Future bargaining sessions are scheduled for July 7 and 14.
Questions or Comments?
Thank you for the emails and comments we have received. We appreciate hearing from you even if you have a different point of view. Please feel free to submit questions or feedback to corporate.communications@swedish.org or here at www.swedish.org/negotiationnews.
