Allina Health's bottom line took a hit in the first half of this year after the Minneapolis-based system paid $20.4 million in temporary labor charges and other costs tied to a seven-day nursing strike.
Management and workers will attempt to end the tense negotiations this Thursday with a vote on a new contract. Both sides remain far from an agreement. The Minnesota Nurses Association already has called on nurses to vote against Allina's latest proposal and support an indefinite strike.
Unionized nurses and executives at the 13-hospital Allina have been negotiating new contracts since February. The latest contract expired at the end of May with no new deal, which led to the seven-day strike at the end of June.
The primary point of contention has been health insurance. Allina wants to move nurses into plans with lower premiums and higher out-of-pocket spending, similar to what other Allina employees are offered. But nurses said they value their current union health plans that have higher premiums but little to no cost-sharing.
Allina and other employers have been moving workers into plans with less generous coverage to avoid the Affordable Care Act's so-called “Cadillac tax,” which goes into effect in 2020. That tax is expected to affect the structure of many union-backed health plans.
Allina's latest proposal would allow nurses to keep their current plans, but they'd have to pay a bigger share of the premiums starting in 2017 and would have higher deductibles and copays (PDF). New hires would not have that option and would have to enroll in the system's “core” health plans.
Allina CEO Dr. Penny Wheeler wrote in the Star Tribune last week that the system “values” the nurses but urged them to accept what she called a compromise deal. “The needs of our patients must come first and that requires us to seek fair and affordable, long-term solutions to our costly health insurance challenge,” she wrote.
The Minnesota Nurses Association, an affiliate of National Nurses United, called Allina's latest offer inadequate and recommended the nearly 5,000 nurses at five Allina hospitals to support an open-ended strike. “A vote yes to Allina Health's offer is a vote to silence our union voice,” the labor group wrote on its website (PDF).
Without the strike-related costs, Allina's 2.8% operating margin would have been 3.8%. Allina's operating surplus was $54.1 million on revenue of $1.95 billion in the opening six months of the year (PDF), compared with $90 million and $1.87 billion of revenue in the same time last year.
Allina still ended the first half of 2016 with $195 million of cash on hand. The health system controls about a third of all inpatient admissions in the Minneapolis-St. Paul metropolitan area.