Issue 13 - The Truth about the New Normal

Issue 13 - The Truth about the New Normal

 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.

                   

Pressures that Create the “New Normal”

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

How Do We Find $200 Million in Savings over the Next Three Years? 

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.

Continued Progress on Language

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.

Looking Ahead

Several sub-committee meetings will take place next week. Bargaining will resume on Tuesday, July 19.

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/negotiationsnews. 
Comments
Steven Nordgren
Seiu-1199 Never tells us ahead of time what we are voting for!! and also trying to put employees against Swedish ,and that where talks just break down ? Let talk nice on both sides ,and things will come together for everyone!!
9/13/2011 2:28:13 PM
Debra
The "Aging and Unhealthy Workforce" that you are talking about is the same workforce that has been working hard for years to give Swedish the great name that it has in the community.
7/22/2011 9:42:56 AM
Swedish Bargaining Team
Dear Unfortunate Swedish Worker:

Thank you for your post. To be clear, we're not recommending a decrease in salary for any employees - Swedish is proud to be a leader in employee wages and benefits and we are not proposing layoffs or base wage cuts to any employees, which many other hospitals and local employers have had to do. 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.

Swedish management has already made some difficult choices – including laying off more than 200 managers, reducing the number of vice presidents by 50%, freezing salaries in 2009 and 2011 for executives, eliminating 175 non-contractual positions and eliminating the pension - all to help ensure a viable financial future for Swedish. Additionally, the executive and manager teams will have the same health plan benefits as is negotiated by the union.

Unfortunately, even these substantial changes have not been enough.

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. There are many ways to get to this expense reduction and we're hopeful the discussion with SEIU will be open and creative.
7/21/2011 4:40:02 PM
Sue B
When you are talking abount simply freezing the defined benefit plan to which employees would lose nothing they have earned; you are sincerely incorrect. When my retirement program began I was guaranteed that by reaching the 85 rule I would be able to receive my retirement benefits as if I had reached my retirement goal. Prior to your dropping expempt employees (below supervisor level) I had printed my retirement benefit via the calculator supplied by Swedish. After your freeze I will lose over $200,000.00 between when I could have retired and my retirement age. In Swedish's viewpoint I am not losing anything as I didn't earn that yet. In the employee's defense, I am losing it all because I have devoted my working years to Swedish bases on the promise of my retirement benefits that they yanked from under us just prior to our retirement years per the 85 rule. Please don't tell me what a good deal this is for the employees. Swedish is planning it's future on the backs of it's employees! Shame on you.
7/21/2011 2:14:20 PM
Dana Lewis
Concerned Employee,

We post all comments that follow our SM policy (which can be found at http://swedish.org/socialmediapolicy). The quick overview is that posts should be on topic to the post, respectful of others even when disagreeing, not in all caps, and include a legitimate email address. Comments are approved even if they hold a differing opinion, and in many cases we have been posting them anonymously (ie without a full name), as you can see throughout the Negotiation News blog.

However, if you would like your future comments to be approved, please use a legitimate email address so we can communicate with you if, like in this situation, you have questions about your comment appearing on the site.

Your email will not appear on the site or be used to identify you. If you would like to discuss this offline/privately, please feel free to email me at dana.lewis or blog@swedish.org.

Thanks for your comments,
Dana
7/20/2011 12:57:17 PM
Concerned Employee
Hi there,
Just wondering what "We appreciate hearing from you even if you
have a different point of view" means. How close does our
viewpoint have to match yours before our comment is posted?

Thank-you, Concerned employee
7/19/2011 11:29:16 PM
Swedish Bargaining Team
Dear Frustrated RN,

You’re right – it’s not necessarily fair to have some employees in the SEIU pension program and not others. That’s why one of the ideas on the table to help us save $200 million over three years is to freeze the current pension program and roll those individuals into our robust 401K program. By “freezing” the pension, the individuals don’t loose anything they’ve built, they simply would switch over to the 401K with all other Swedish employees. This is one idea to not only reduce expenses, but also create a more equitable approach for all.

To address your comment about the new Issaquah hospital, our nation’s ever-changing healthcare marketplace requires that we remain “diversified.” This means we need geographic diversification, patient and payor diversification and service/specialty diversification. Issaquah and the ACCs in Redmond and Mill Creek are helping us diversify into suburbs where there are typically younger patients who have commercial insurance, which pays 40% to 60% more than government insurance (Medicare and Medicaid). At First Hill, Cherry Hill and Ballard, the payor mix is much less favorable than in the suburbs where patients tend to be older and rely on government insurance.

To pay for Issaquah, Swedish took out $250 million on loans through a bond sale, using proceeds from our bond sale to finance the construction. As you probably know, a bond is essentially a promise by Swedish to repay the principal in full when the bond is due, and to pay interest in the meantime. In many ways, it is like a mortgage or other loan that many of us are all too familiar with. In addition, part of the building is owned by a developer and we lease (making monthly payments) from them. None of the money to build Issaquah came from our operating fund, that’s money we use for day-to-day operations, including employee wages and benefits.
7/19/2011 8:38:46 PM
unfortunate swedish worker
There is alot of talk about "fairness" in these comments. If our CEO and top management would lead by example and decrease their salary and benefits by the same percentage (roughly 25-30 percent with dependants) as being asked of the workers then it would mean something. It does not feel like we're all in this together but having the load placed on our backs.
7/18/2011 2:38:08 PM
Fursterated RN
You Wrote: "The Swedish pension plan for SEIU employees is a pension program that Swedish pays for but is only available to select SEIU members, those hired by Swedish before 2005. Swedish also has a passion for fairness; 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 just not fair. "

Solution to that? Make it available to everyone... then its fair. As far as your current verbage, its sounds like you are trying to divide the employees and make those who you refuse to allow to have a pension to go against those who have it.

Work on some realistic proposals and stop trying to act like the sky is falling...

Also, stop expanding and building new hospitals / taking over hospitals if you can't support what you have!
7/17/2011 11:02:35 AM
Swedish Employee
Let's be clear. $12 million dollars below budget is NOT the same as a $12 million dollar loss.
7/14/2011 8:10:04 AM
Swedish Bargaining Team
Dear Concerned Employee:

Thanks for your comments. We've attempted to address and clarify some of your questions and concerns below.

The Swedish pension plan for SEIU employees is a pension program that Swedish pays for but is only available to select SEIU members, those hired by Swedish before 2005. Swedish also has a passion for fairness; 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 just not fair.

Regarding tiered healthcare premiums, this is just one idea to make the cost of healthcare more affordable for all employees at Swedish. Fair and equal are not the same, and we would argue that an employee who makes $150,000 might be able to pay a bit more than an employee making $40,000 – this is not equal, but we think it is more fair.

Swedish must reduce expenses by $200 million over the next three years and will work with SEIU to find their fair share of this expense reduction. There are lots of ways to get to this savings, and we’re open to creative ideas and solutions, but the bottom line is that SEIU must contribute their fair share of this savings.
7/13/2011 10:20:54 AM
Allan S
Swedish is correct. We collectively agreed to health care reform (like it or not)- which is intended to reduce payments to hospitals and providers in exchange for covering uninsured individuals. We can't have it both ways. Reimbursement for services has to inevitably decline - and if we end up with a single payer system that reimburses all services at near medicare/medicaid rates, income will drop even further. Organizations must change to adopt to this reality . The old rules (and fee-for service medicine) have changed forever.
7/13/2011 9:55:14 AM
Concerned Employee
I have yet to receive an answer regarding my question on 7/2/2011 about the so called SEIU pension program. Is this because it does not exist???? Everyone knows that SEIU 1199 fought and won the right for those that had the Swedish pension plan to keep it
intact as stated in our 2008 contract. In the future, please try to label
issues correctly so that employees are not mislead over what they actually have. Our pension is through Swedish Medical Center.

The Union has taught me to have a sense of passion for fairness
for all employees. I don't believe that just because an employee's
paycheck happens to be more than mine that they should have to pay a higher premium for their health care benefits. It is not my habit to judge people in that manner. Often people have situations and obligations that are not common knowledge.

Swedish Medical Center's RN.'s are some of the finest people I know. They delivered my baby, helped my Grandfather die with dignity and were there with my Mother as she walked on her two new knees. It would be a cruel joke to make them pay more for their health care benefits simply because they made a decision to go to school to learn how to care for the sick and save lives. What next??? Are the Physicians going to buddy up with the service workers to help pay for their parking since their income is higher?
Please do not pit one group of employees against another. This is
OUR Hospital. All of ours. All of Swedish Medical Center employees
should have equal affordable benefits.

From our top down, after the game the King and the Pawn go back in the same box.

Thank you, Concerned Employee
7/12/2011 10:22:26 PM
r gedney
they arent blowing money on a brand new hospital in issaquah
7/12/2011 2:53:30 PM
Perry W.
how is it that Valley Medical Center, Renton. Can do so much better by their staff, guaranteed raises for the next four years at least 11.5%. No premium share for healthcare, for self and family, guaranteed wage steps.
7/12/2011 1:18:27 PM
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