A Closer Look at the Valley Contract

A Closer Look at the Valley Contract

A Closer Look is a new publication aimed to provide a deeper look into some of the issues important to Swedish and our employees. As Swedish and SEIU are involved in contract negotiations around wages, benefits and other issues for RNs, technical staff and service workers, it is important to provide more in-depth information about some of the issues and topics that surface as a result of negotiations.

Swedish, along with other healthcare organizations, is facing some of the toughest economic times in recent history. The perfect storm of the recession and healthcare reform have redefined our financial environment and for the foreseeable future, it will be our “New Normal.” As a result, Swedish must find $200 million in savings over the next three years. The business decisions we will make, as well as our SEIU contract proposals across all areas, reflect this “New Normal” and its impact on our ability to remain financially stable.

Recently, SEIU and Valley Medical Center completed their contract negotiations and there has been a lot of talk about this contract, so we are devoting this edition of A Closer Look to the Valley contract.

First, we congratulate Valley and SEIU for coming to an agreement on a new contract so quickly. These negotiations are never easy and it is a testament to all parties involved. The new contract includes wage increases for employees, while keeping their generous healthcare coverage and retirement contributions the same.

Comparing Valley to Swedish: Not apples to apples

There is a substantial difference between Valley and Swedish. Valley is in a Public Hospital District, which means it is partially supported by taxpayers in that district. In fact, Valley receives 5.1% of its operating revenue or $19 million a year from taxpayers!

If Swedish also received 5.1% of its revenue from taxpayers, it would equate to $81 million annually, which would more than cover the $200 million in savings we must find in the next three years.

We need to work with SEIU to identify their fair share of the $200 million savings we need to achieve over the next three years to ensure a viable financial future for Swedish.

What is SEIU's fair share?

Swedish has put forth a number of ideas for the Union to consider as we seek an outcome that is fair for all who rely on Swedish. Despite economic and industry challenges, Swedish is not proposing wage cuts and remains committed to being a leader in employee wages and benefits.

Some of the ideas Swedish presented to the Union to save $200 million include:

  • Reducing Healthcare Costs: Ideas include establishing a wellness program, incentivizing healthy behaviors; increasing healthcare cost sharing and adjusting our medical plan design to further reduce healthcare costs while ensuring the health and well being of our employees.
  • Freezing the Pension: The pension is a large and unpredictable expense and with only about a quarter of Swedish employees actively able to participate in the pension program, it is not fair.

Comments or feedback?

For more information about contract negotiations, check Negotiation News or here at  www.swedish.org/negotiationsnews. 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 www.swedish.org/negotiationsnews.

Swedish Bargaining Team

Thanks for your question. Retired employees on the pension program will not be affected by the pension proposal, nor will it affect accrued benefits. Swedish included “freezing” the pension as one of a number of options SEIU could look at to help achieve the $200 million in savings we need to achieve over the next three years. Employees would be eligible for the 401k plan, which is a much more predictable cost for Swedish.
8/12/2011 2:32:21 PM
Swedish Bargaining Team
@Well Traveled Nurse:

Thanks for your comment.

Swedish has proposed a number of cost savings options to help achieve the $200 million in savings we must find over the next three years. As difficult as it is, we all need to make tough choices and sacrifices to ensure Swedish remains financially stable. The hard truth is that Swedish must reduce expenses by $200 million over the next three years and now is the time to work with SEIU to identify what role they play in their fair share of this expense reduction.

The management team has led in the effort to cut costs to find necessary savings. Since 2009, reductions include 200 managers, a 50% reduction in vice presidents, salary freezes in 2009 and 2011 for executives, 175 non-contractual positions and eliminating the pension. Management has recognized the need to share the burden of cutting costs, but these changes were not enough.

We are asking SEIU to work to find their fare share in savings to address the current financial situation. Management has presented a number of proposals that include retirement plan, health benefits and forgo salary increases. We will continue to negotiate to find these savings. There are many ways to get to this expense reduction and we're hopeful the discussion with SEIU will be open and creative.
8/12/2011 2:31:02 PM
How is it fair to retired employees who are relying on the pension money to live?
7/30/2011 7:16:34 PM
well traveled nurse
I think the biggest problem here is such a that it is a huge financial blow to every employee in one fail swoop, not only no step increases, but no cost of living increase, plus taking a good chunk of money out per check for healthcare costs. It's not being looked at like saying, over the next 3 years swedish will increase healthcare premiums a certain amount per year to get what it is they want it at or that swedish is even offering a cost of living increase per year to help buffer the change in cost of healthcare premiums. People need time and some sort of compensation to provide for rising healthcare costs and cost of living to survive. I have worked at many hospitals (as a traveling RN) both large and small, community, private, not for profit , union and non0union and I keep in touch with a lot of people in these places and none of these hospitals have made such a dramatic change with their employees, some have wages freezes for a year, others have had increased costs with their healthcare, but all have had some financial compensation through cost of living raises in the least to help their employees adjust to the so called "new norm". I don't understand how they can take every type of raise increase away but expect people to pay a lot into their heathcare?
7/27/2011 11:55:17 AM
Swedish Bargaining Team
Dear Concerned:

Non-union employees have been feeling the effects of the New Normal longer than SEIU members, and that’s not fair. We do not plan to make pay cuts, but all employees – Union and non-Union – will be expected to contribute to their healthcare premiums in the years ahead. The rising cost of healthcare has made premium share standard practice for most employers, Swedish cannot afford to continue to be the exception.
7/27/2011 9:43:43 AM
Dear Outsider,
Please note there are many many unfilled positions at SMC. Not that easily replaced. And there are many many hospitals, including this area whos RN's are paid the same if not more - all of the increments need to be looked at to compare!
7/27/2011 8:48:20 AM
Outsider looking in...
I am shocked at the naivety of the staff at SMC. YOU are replacable and can easily be hired at lower rates. This is called resetting the standard...it is OK if you get upset and leave because there are many others that will take your job at a lower rate. The very, very sad part is that Swedish is not about attracting the brightest and best, but the best value at lowest cost. Stable, well run hosptial organizations do not need to do cylical layoffs and restructuring if they are well run and have integrity. There are healthy healthcare enviroments out there that value their staff and seek nursing excellence...I don't know how else you need to be told, Swedish is not like that!
7/26/2011 4:31:32 PM
Who's brain child was it to bring Issaquah in early and over budget d/t overtime? While I understand that we need to "grow the system" is it really in everyone's best interests to spend the extra money that apparently management is asking the employees to pay for?
7/26/2011 12:21:22 PM
Us non-union folk can only imagine whats coming down the road for us, as we have zero representation. Will these extreme cuts in pay by way of raising health care premiums be handed down to us without choice? Will there be indefinite wage freezes? What will be OUR SHARE of the 200 Million?
7/25/2011 5:44:59 PM
Swedish Bargaining Team
Hi Joy,

Thanks for your comment. We greatly appreciate our employees and their outstanding work – in fact, it’s the reason behind why we provide some of the most competitive health care wages and benefits in the region.

That said, changes in the way hospitals are paid, healthcare reform and the economy have hurt Swedish’s financial stability. These changes are not going away - this is the “new normal” in healthcare.

The Swedish bargaining team presented three different potential economic options for SEIU to consider; two of the options considered freezing the pension and converting to our 401K, one of them considered keeping the pension, but the impact on wages and medical benefits was more significant with this option.

As we seek an outcome that is fair to all, we cannot ignore the fact that only 2,308 of our 8,860 employees are in the pension plan, this just isn't fair. We have purposely designed our 401k to be very generous. Swedish contributes 5% of annual earnings to eligible employees as a company contribution to the 401(k) and matches 100% up to 2% of participating employee’s earnings.

These two options were intended to provide a few ideas for how SEIU could begin to look at making the hard choices needed to identify their fair share in helping Swedish reduce expenses by $200 million over the next three years. We look forward to hearing back from SEIU about their ideas for reducing expenses and contributing their fair share to the process.

We know the pension is a sensitive subject, but we believe that to be fair to all of our employees, it is something that should be considered. Two years ago, all non-union employees' pensions were shifted into a generous 401K retirement program to help preserve Swedish's financial stability and save full-time jobs. In is our belief that to achieve an outcome that is fair for all, the 2,308 employees still in the SEIU pension program now need to pull together and make the hard choice to preserve jobs and ensure that Swedish has a bright future.
7/25/2011 5:02:06 PM
Swedish Bargaining Team
Dear Anonymous,

Thank you for your post. You’re correct – Swedish took a hard look a few years ago at how we might reduce our expenses and were able to reduce costs by $30 million through elimination of 170 non-contractual employees, freezing pensions for non-union employees and moving them to our generous 401K plan, laying-off 50% of our vice presidents and creating a major reduction in supply spending.

Additionally,we’ve identified projected reductions of $60 million through standardization of clinical tools and supplies.

We are being completely honest when we say we have some of the highest health care wages and benefits in the region. Our service workers earn 11% more than other area hospital employees, our technical workers earn nearly 9% more and our RNs earn between 2.2 -4.6% more than other area hospital employees.

We’re proud of this commitment to our employees and remains committed to being a leader in employee wages and benefits.
7/25/2011 4:59:00 PM
Joy Turner
My comment has to do with the Pension 'not being fair', when I read that statement about freezing the pension because it serves so few and just isn't fair, my immediate thought was that in the past companies attempted to reward those who stuck with them for the long haul. To those of us who are close to retirement and have been planning on this pension to round out our retirement plan this idea feels like a distinct lack of gratitude for the loyalty of long term employees.
7/25/2011 1:38:53 PM
Swedish seems to think as though the "little" people do not count and are easily replaced. Swedish does not need all the executives that we have, especially with 7 of them making over 1 million. The best thing that Swedish ever did was to get rid of the extra padding in management with the layoffs that took place. It was not necesary to have so many people in management.
As far as Valley's contract, it may not be the exact same but Swedish needs to be honest- what they are offering is not the top pay and benefits but the worst!!!
Advertise correct information and stop lying!
7/25/2011 11:34:26 AM
P. Rhodes
"We need to work with SEIU to identify their fair share of the $200 million savings we need to achieve over the next three years to ensure a viable financial future for Swedish."
I don't remember having a vote or any say whatsoever on the acquiring or opening of these new facilities. We might have told management it wasn't such a great idea. Didn't Swedish go thru a restructure in 2008? Hardly the sign of a financially stable organization then. Plans to expand the organization should have been postponed until Swedish reserved the bulk of this so-called 200 million and ensured that its employees would not be taking such a huge hit.

I understand the need to invest; however your employees are your greatest investment. This should have been looked at and laid out when the uppers were deciding where and when to open these new faclities.

Also, Swedish so conveniently omits from their postings that they are looking to freeze wages for the next 3 years. Maybe it has something to do with the numerous openings that need to be filled. Nothing like telling a perspective employee "you will not get any increase anytime in the near future and your healthcare premiums will be through the roof, but hey we still want you to come and work for us."

Management needs to get it together and come back to the table with a proposal that is fair to everyone involved.
7/25/2011 10:08:16 AM
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