Despite intensifying efforts by New York City hospitals to squeeze out excess capacity and costs, labor and management negotiators have reached a pact that guarantees job security for some 32,000 healthcare workers through June 30, 1998.
Negotiators for both sides said the agreement is unique because it ensures jobs, pay increases and worker retraining opportunities while allowing hospitals enough flexibility to reduce their size and restructure their operations.
The four-year contract announced last week by Local 1199 of the National Health and Human Services Employees Union and the League of Voluntary Hospitals is valued at about $147 million, according to league President Bruce McIver. That's far less than the $234 million cost of the previous contract, which was set to expire June 30, 1995.
Spencer Foreman, M.D., president of Montefiore Medical Center and chairman of the League of Voluntary Hospitals, which represents 30 private hospitals, said the contract trades job security for a substantial decrease in the rate of pay increases.
Under the new agreement, full-time workers with at least two years of tenure cannot be laid off during the contract period. An estimated 32,000 of the union's 38,000 hospital workers currently qualify for that protection.
Part-time workers and those with fewer than two years of seniority who are laid off will receive 80% of their salary and health benefits for themselves and their families for one year.
Workers will receive a wage increase of 4% on Oct. 1, which was negotiated under the previous contract. The new contract increases wages by 3% on June 30, 1996, and another 3% on June 30, 1997. The pay increases are offset by a reduction-equal to 2% of wage costs-in hospitals' contribution to union members' health benefits fund. The reduction was possible because healthcare benefits costs did not rise as steeply as predicted, officials said.
In the past two years, New York hospitals have laid off 1,000 healthcare workers, including 400 Local 1199 members, and more layoffs are expected as hospitals seek increased efficiencies. According to a union attorney, the early contract renegotiation was prompted in part by the risk of additional layoffs.
Dr. Foreman said the contract contains no contingency for the potential loss of New York's exemption from the federal Employee Retirement Income Security Act, which governs self-insured health plans. Currently, a federal tax loophole preserves New York's system of passing along bad debt and charity-care costs to private payers. That protection expires in May. Meanwhile, a federal court ruling that prohibited the surcharges as a violation of ERISA is being appealed.
The loss of an ERISA exemption could unravel the state's hospital rate-setting system. "We would have to restructure the entire healthcare delivery system under a new set of assumptions," he said. "It's not clear how we'd do that."