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Collective Bargaining in an Era of Healthcare Reform; How One System Saved $18 Million Through Negotiations Brian Sweeney, RN, FACHE Vice President for Clinical & Support Services Joseph Anton, RN Vice President for Clinical & Support Services

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I.Organizational profile & union environment II.Contract negotiations III.Strike preparations IV.Outcome and return on investment Agenda 2

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Describe how to formulate a strike plan to strengthen your negotiating position and minimize revenue loss from a work stoppage. Identify tactics to reduce operating expenses associated with a collective bargaining agreement. Demonstrate how to assemble a negotiating team that will lead to optimal outcomes. Objectives 3

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I. Organizational Profile and Union Environment 4

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Philadelphia, PA 953 bed academic health system 3 hospitals 46,000 admissions 100,000 ED visits 8,000 employees 3 unions Organizational Profile 5

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Affiliate of National Union of Hospitals & Health Care Employees, AFSCME, AFL-CIO 72,500 national/17,000 local/1,ooo Jefferson members Experienced leadership team Simultaneous negotiations with 4 hospitals Previous strikes Key positions: EVS, nursing assistants, transport sterile processing, nutrition, mail room & supply chain Key Facts District 1199c 6

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Different TimesHigher Stakes 7

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II. Contract Negotiations 10

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Secure a realistic and responsible collective bargaining agreement given ACA Maintain high quality care Protect patients, visitors, and staff Continue academic activities Maintain image/reputation Minimize revenue loss Provide consistent messaging Negotiation Objectives 11

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Engage multidisciplinary teams Analyze data Develop formal plans Synchronize timelines Communicate effectively Educate union Approach 12

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Hospital administration University administration Human resources Internal counsel Outside labor counsel Support financial administration Negotiating Team 13

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Total annual cost of contract = $52.5 million Wages - $36 million Health and welfare - $12 million Pension - $3.9 million Training/legal - $720,000 Starting Point 14

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Challenges: Highest wages in marketplace Payroll drives pension costs Union will oppose anything reducing dues Goals: Preserve current workforce salaries Two tiered wage structure # 1 - Wages 15

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Challenges: Multi-employer plan Most costly benefit Rich plan with low co-pays High ED utilization & low PCP engagement Goals: Maintain contribution rate for 30 months Reduce benefit costs Activate disease management # 2 - Health and Welfare Benefits 16

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Challenges: Grossly underfunded Freeze is best option Limited options with federal requirements $62 million withdrawal liability Rate increase in 2014 Goals: Migrate to defined contribution plan Develop hybrid alternative # 3 - Pension 17

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Challenges: Poor attendance Paying OT to cover call outs Right to use time Implement for non-union employees first Goals: Migrate to ETO plan Resolve other matters first # 4 - Earned Time Off (ETO) 18

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III.Strike Preparations

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Potential scenarios Contract ratification prior to expiration Contract expiration/pre- announced strike 10-day notice Unannounced walkout Contract Ratification or Strike? 20

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Strike Preparations Challenges: Take firm position to reduce 1199C expenses, increasing likelihood of a strike Uncertain when strike will occur Goals: Minimize disruptions to operations Maintain security for patients, visitors, and staff Maintain image/reputation through aggressive PR

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Financial Implications of Strike Strike estimated to cost $1.5 million for 8 weeks Reduction of 1199C payroll helps offset expenses Reduced admissions budget Unable to quantify risk of PR/media exposure

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Confidential playbook Formal written document Multidisciplinary involvement Clear written procedures with accountability Set timelines Developing A Strike Plan 23

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Staffing plan - day 1-7 - internal Redeploy non-clinical staff Train within 7 days of contract expiration - visible Staffing plan - day 8+ - external Large, experienced national firm Cost Authorization to deploy Logistics Replacement Staffing 24

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Jefferson Outside security firm Philadelphia Police US Marshall Service Security 25

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Hired outside crisis communication firm Developed tools for departmental managers FAQs, progress reports Trained spokespersons for media inquiries Prepared statements for patients, media, & vendors Monitored social media PR/Communications 26

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Verified vendors will deliver Stockpiled medical/surgical supplies, pharmaceuticals, and office supplies Secured refrigerated trailer for perishables Identified off site depots for deliveries Used undercover vehicles for deliveries Supply Chain 29

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Prepared injunctions Emergency arbitration hearing Conducted management education Reviewed communication Hold union accountable for following laws Notification to DOH/Joint Commission Legal and Regulatory 30

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Test the plan Did people read it? Did we miss anything? Are we ready? Scenarios Access to loading dock will be impeded for an extended period of time given an excessive number of protesters. What is the alternate plan? How is it implemented? Table Top Exercises 31

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Leads implementation of the strike plan Staffed 24/7 Labor hotline Monitor campus security Coordinate deliveries, communication and staffing Monitor media activity and coordinate response Labor Operations Center (LOC) 32

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Coordinate logistics for inbound staff Travel, hotel, meals, transportation Identification Health screening and immunizations Scheduling Record keeping Training with department managers Staffing Center 33

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Demonstrate preparation to reassure patients/staff Protect perimeter Coordinate efforts with law enforcement Videotape picket line activities to gather evidence Provide executive protection Escort employees and vehicles safely in and out Security Responsibilities 34

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Rallies 35

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IV.Outcome and ROI 37

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Settled on July 1 st at 3 am Six year agreement Health and welfare reopener in July 2014 $18,609,304 million in savings over life of contract Wages/pension - $12,391,486 Health and welfare - $1,913,868 ETO -$4,303,680 Results 38

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Cost of strike preparedness - $262,000 Legal fees - $240,000 Public relations firm - $36,000 Total -$540,000 Return 35 x initial investment ROI 39

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OT hours per pay Before - 1,310 After - 591 Time off hours per pay Before - 5,887 After 2,388 ETO 40

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Engage operational leaders in negotiations and strike preparations Link negotiations to strike preparations Ensure preparations are visible Be sure you are ready to take a strike! Continue communication on terms after ratification Understand role of other hospital settlements After action review we will do it again in 6 years Lessons Learned 41