By Mathew Keller
Regulatory and Policy Nursing Specialist
MNA Regulatory and Policy Nursing Specialist
Allina’s final estimate of how much money it wasted on labor strife is in, with the health system pegging its total strike costs at 149 million dollars. As Allina employees know, however, this number is an underestimate. While the estimate includes the cost of shipping replacement nurses into Minnesota and paying them hourly rates that would make a cardiologist blush, and subtracts the costs Allina would have paid its trusted nurses were they not on strike– it does not account for the fact that Allina has been and will continue to pay eye-popping sums for replacement nurses well into 2017 due to the extreme level of nurse-turnover post-strike.
Either way, 149 million dollars is a lot of money. It’s enough to get you to the moon, build two Metrodomes, or to buy these three islands in Panama. If you’re Allina, it’s also enough to double the amount of patient debt that you forgive, triple the amount of charity care you provide, or quintuple the discount you give to uninsured patients. As Allina CEO Penny Wheeler put it back in June, a mere $10 million in cost-shifting to nurses “means a whole lot to what service we’re able to provide.” No word yet on what needlessly losing $149 million means to that service.
Allina’s strike costs will continue to grow as nurses continue to vote with their feet and leave for greener pastures. The health system continues to plug holes with high-priced temporary nurses, and has begun offering referral money and $5000 bonuses for new nurse hires. Keep in mind though, that training and orienting a new nurse is expensive, at an estimated cost of $27,000 to $103,000 per each new RN. In the long run, it’s much more cost effective for a hospital to simply keep the nurses that it already has. Unfortunately, as we’ve warned, the research shows that one of the highest sources of RN job-dissatisfaction, and thus turnover, stems from sub-par health benefits. In the end, attempts to diminish nurse health benefits truly are short-sighted.
A last unaccounted-for factor in Allina’s strike cost estimate is the decreased patient volume that has resulted from the strike, its aftermath, and its hit to Allina’s public image. Even after accounting for strike costs, Allina mentions in its 4Q financial report that a 2016 decrease in operating income resulted from “softer than expected hospital volumes.”
Ironically enough, although the $149 million loss on the nursing strike caused Allina’s 2016 operating income to come in at a loss of $30 million, Allina still made money due to its non-healthcare related activities. In fact, Allina made a cool $83.4 million dollars on investments such as stocks, hedge funds, bonds, properties, etc. The result? A total net income of $46.9 million dollars on the year.
Unfortunately, $46.9 million dollars is not enough to score the three islands in Panama. It’s too bad; we all know how Allina executives love their Caribbean stashes.