Nurses walkout putting a dent in OHSU budget
Hospital is paying an additional $500,000 per week for replacements
Oregon Health & Science University has spent at least $500,000 a week, or almost $2.5 million over budget, for replacement nurses and other strike-related expenses in the month since more than 1,000 OHSU nurses went on strike Dec. 17.
And as the strike drags on, OHSU's costs continue to mount Ñ although none of those costs are paid out of public funds, the university said.
OHSU actually has spent more than $4 million on replacement nurses, said Aaron Crane, chief financial officer for the school's hospitals and clinics. However, the hospital is not paying the nurses who are on strike, nor paying for their benefits.
Strike costs include paying an agency $54 an hour for each replacement nurse hired; hotel and transportation expenses for the replacements; and extra security at the hospital.
The hospital has hired about 440 replacement nurses, and 310 OHSU nurses have crossed picket lines, university spokesman Martin Munguia said Thursday.
But the Oregon Nurses Association, representing the striking nurses, said fewer than 200 nurses have crossed picket lines.
Meanwhile, the hospital was operating at 86 percent capacity Thursday, with 349 patients, Munguia said.
Living with the costs
The university is willing to incur the short-term costs of the strike, high though they may be, Crane said, because it cannot afford to pay what he called the 'abnormally large salary increase' that the nurses are demanding.
The union wants a wage hike of 19 percent over the next two years. The university is offering a 20 percent raise over 39 months Ñ a 6 percent raise for each of the next three years and a 2 percent raise for the three months after that.
Giving in to the nurses would force other local hospitals to raise salaries and add to the metro area's soaring health care costs, Crane said. Patients will then pay more for health care.
The union contends that its proposal would bring OHSU nurses up to market wages. And, with last year's $33 million profit margin, the university should be willing to invest more in its nurses, said union spokeswoman Kathleen Sheridan.
Unlike the hospital, the nurses can afford to wait, she said.
'The way we look at it is, how long is OHSU willing to bleed the institution of money?' she said. 'The nurses are in far better shape than OHSU is. They're out working someplace else É and earning more.'
She said about 100 of the striking nurses are looking for new jobs.
Crane said OHSU had received three formal resignations from striking nurses.
Net income increases
The $33 million the university netted last year represents a 7.6 percent net-income margin, well over the 2.4 percent margin the university has averaged over the last five years.
Standard net-income margins for health systems in the Portland area are 6 percent to 7 percent, Crane said.
For the last five years, he said, 'OHSU has been just on the profit side of operations and below community averages. We think this historical picture should be taken into account if you want to mention last year's profits in relation to our ability to pay hefty raises.'
Much of the $33 million is used for operations and growth-related costs, Crane said.
Strike-related costs are paid out of the hospital's operating budget and not with public funds. Only 2.4 percent of the budgets for OHSU's two hospitals (University and Doernbecher) comes from state funds, according to university figures.
Crane said the hospitals' revenues come from patient-care services. State dollars are used to pay for low-income patients and for some education programs.
Rough times for nurses
Ken Rutledge, president of the Oregon Association of Hospitals, acknowledged that nurses have 'legitimate challenges,' including a decreasing number of nurses caring for an increasing number of acutely ill patients.
But, he said, hospitals aren't to blame.
'There's intense pressure (on hospitals) to keep costs in line, and more than 50 percent of costs are payroll and benefits. And prescription drugs are skyrocketing.'
The frustrations that OHSU nurses are experiencing are plaguing nurses nationwide, Sheridan said.
'The very same feelings these nurses have every day are the same feelings a nurse in Hoboken, N.J., is having,' she said.
'The greatest cost to OHSU,' she continued, 'is in losing their nurses. And every day this goes on, more and more people are questioning whether to go there.
'If this is a test of wills, they are going to lose.'