A new contract between Kaiser Permanente and 4,800 nurses, nurse practitioners and physician assistants in Southern California appears to break new ground in hospital labor relations.
For the first time, nurses will get something akin to profit-sharing if the health plan meets predetermined goals. Because Kaiser Permanente is a not-for-profit HMO, they don't call it that, but the principle is similar.
The contract between the United Nurses Associations of California and 10 medical facilities run by the giant HMO links the nurses' compensation to the health plan's needs in several innovative ways. A "performance outcome program" will reward nurses with a lump sum payment at the end of the year if Kaiser achieves its targets for:
Reducing operating costs.
Michael McCabe, assistant human resources manager, said that most of the savings will go to members in the form of reduced premiums or enhanced benefits, but that Kaiser believes its employees ought to have a share in its success.
"We're not talking about a windfall," McCabe said. The payments could be on the order of $500 to $800 a year.
Kaiser gets a wage freeze for the first year and a subsequent adjustment mechanism. It had originally demanded wage cuts. In the future, a third-party health economist will compare nursing compensation in a comparable community and set Kaiser wages 4% above that rate. That means some nurses' salaries could go down, but decreases will be limited to 2.5% a year. Nurses whose wages decline will be entitled to a special payment out of the cost-sharing pool.
Kaiser also gets a five-year duration for the contract, a first.
In return, the nurses get something close to a no-layoff guarantee. Where nursing staff must be reduced, Kaiser will offer them a number of alternatives: retraining, moving to other facilities and going to on-call pools. Only in rare instances, such as a unit closure, could nurses be laid off, McCabe said.
For staff nurses, the starting hourly wage is $20.27, or $42,162 yearly, with a top rate of $26.58. At the high end, a charge nurse in a specialty unit with 15 years of service earns $29.60 an hour, or $61,586 a year.
The union also will sit at the table when Kaiser adjusts the "skill mix," or ratio of licensed nurses to unlicensed personnel in a unit. The union was prepared to strike over that issue.
UNAC President Kathy Sackman said the union understands that it may not be feasible to maintain such a high ratio of registered nurses as the hospitals now have. That's why nurses want to participate in determining the skill mix on their units.
"We wanted to be on the ground floor with input into how that decision is made, to focus on patient safety issues that come up," Sackman said. "By maybe replacing two out of eight positions with licensed vocational nurses and two or three nursing aides, then you have a team."
An early version of the proposed contract was leaked to the Los Angeles Times, prompting a denunciation from the California Nurses Association, whose members are mainly from Northern California. That union said the contract put nurses in the same compromised position as doctors who earn rewards from HMOs for withholding care.
Anna Gilmore, a labor relations specialist with the American Nurses Association, had not seen the contract and was not familiar with its particulars. But in general, she said, the ANA discourages bonuses for nurses, preferring that they get a good wage.
Sackman said she agrees that no health professionals, including physicians, should get rewards for not seeing patients or withholding care. But, she said, the Kaiser organization must reduce its budget to remain competitive, and "everybody knows a hospital operating budget is 50% to 60% labor."
The nurses say they are willing to do their part to attain that goal, provided they share in the rewards. "Quite frankly, I don't believe that is going to hurt patients," Sackman said, because organized nurses are still committed to challenging administrators if they think patients are being mishandled.
To ensure the nurses' freedom to speak out, the union did not agree to any confidentiality clause or no-public-statement policy, as Kaiser had requested originally. "We rejected it. We have a role to play there. We should be out there," Sackman said.
She added: "There's no comparison between what people call managed care and the Kaiser system. It's vastly superior." The trouble is, competitors have given Kaiser such a scare that "they now want to look like the other managed care. I don't think that's appropriate for them, but I don't want to see them go out of business."