Nurses at a major Boston hospital went on strike Wednesday for the first time in three decades at a time of concerns nationally over labor costs at hospitals.
Some 1,200 nurses at Tufts Medical Center staged a one-day strike over a contract dispute centered on the hospital's efforts to alter retirement benefits by moving nurses who still have traditional pension plans into less costly 401 (k)-style accounts.
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Tufts, a 415-bed nonprofit teaching hospital, brought in hundreds of temporary nurses to replace picketing nurses, who at 7 a.m. began waging what the Massachusetts Nurses Association called the largest nurses' strike in state history. The two sides won't be back at the table until after Monday.
"These are challenging times in health care," Michael Wagner, the president and chief executive officer of Tufts, said in a statement Wednesday. "We must make decisions that ensure the financial viability of our hospital so we can continue to provide the high-quality, low cost care our patients depend on."
Labor costs, typically the largest expense at hospitals, have been pressuring profits at hospitals around the country. Expenses for salaries and wages "just popped" between 2015 and 2016 for a host of potential reasons, ranging from a shortage of skilled professionals to rising costs for employee benefits, said Beth Wexler, a vice president at Moody's Investors Service.
Hospitals are also concerned that the planned Congressional repeal and replacement of the Affordable Care Act could squeeze Medicaid budgets in states like Massachusetts that expanded Medicaid -- resulting in hospitals generating less revenue or serving more uninsured patients.
Some 15 months of negotiations between Tufts and nurses included disagreements on pay and staffing, with a key sticking point being retirement benefits.
Seeking to restrain costs, health-care providers, states and companies have increasingly moved to reign in rising pension obligations. In late June, United Parcel Service Inc. said it would freeze pension plans for about 70,000 nonunion staffers.
Classic pensions, or defined-benefit plans, are funded by the employer, which also bears the investment risk. Workers, meanwhile, are primarily responsible for funding 401(k)-style defined-contribution plans -- with employers often providing a partial match -- and bear all the investment risk.
Employees who have retirement benefits at work are overwhelmingly enrolled in defined-contribution plans rather than traditional pensions, a trend that took hold in the late 1980s and was exacerbated by the recession, said Stephen Blakely, spokesman for the Employee Benefit Research Institute.
Tufts said it is spending $6 million a year on administrative costs to run its traditional pension benefit, and that continuing the plan is unwise at a time when hospitals are trying to control health-care costs.
Tufts stopped offering traditional pensions to new nurses in 2005 and said it now wants to move the remaining 340 nurses with traditional pensions onto defined-contribution plans. The money the nurses have accrued so far for retirement would stay in a pension, but going forward, they would save for retirement in a 401(k)-style account.
Nurses oppose that proposal because they worry about the safety of their retirement funds if, for instance, the economy goes into another recession, said David Schildmeier, the spokesman for the Massachusetts Nurses Association, the union that represents nurses at Tufts and more than 80 other facilities.
"When you have a 401(k), you have to carry all the risk," he said. "When you lose it in a 401(k), it's gone."
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(END) Dow Jones Newswires
July 12, 2017 17:46 ET (21:46 GMT)