Nurses’ Strike advances debate on hospital safety

BY JOEL ALBERS

The Minnesota nurses’ strikes of 2001 and 2010 articulated the need for greater nurse/patient ratios to improve patient safety, quality of care and to help lower hospital mortality rates. The need for fixed ratios is borne out by a growing body of data. Fifty studies are posted on the MN Nurses Association website http://www.mnnurses.org/

According to a 1999 Institute of Medicine landmark report, system errors in
hospitals kill up to 98,000 people each year, making systemic medical errors the eighth leading cause of death in the U.S. These safety errors include surgery on the wrong body part, object left in the patient, serious bedsores and falls, to name a few. These “never events” occur all too commonly under current hospital working conditions both in Minnesota and nationally.

Contrary to hospital claims, there is a great need for improvement in Minnesota hospital mortality rates, the ultimate quality measure. The
Minneapolis Veterans Admini-stration has lower mortality rates for congestive heart failure and heart attacks, compared to the three top Minnesota hospitals involved in the contract negotiations—Allina’s Abbott Northwestern, Park Nicollet’s Methodist, and HealthEasts’ St. John’s. (Note that these hospitals’ data are for Medicare patients only, and don’t include people in Medicare Advantage Plans (like an HMO or PPO) or people who don’t have Medicare, in which cases the outcomes would likely be worse). Several studies show that the V.A., the largest hospital system in the U.S, and government-run, outperforms all other hospitals on these and most other quality indicators.

Most people are already aware of overcrowded emergency rooms. The average time that hospital emergency room patients wait just to see a doctor has increased to an hour, from 38 minutes a decade ago, according to a recent report by the U.S. Centers for Disease Control and Prevention. After seeing a doctor, inpatient admission typically takes several more hours.

A key point in the demands and debate between the nurses and hospitals was: Are hospital costs labor or capital driven? That is, are inadequate nurse/-patient ratios due to a shortage in the supply of registered nurses or to excess capital spending to build more hospitals? The latter appears to be the case. Minnesota has more hospital beds than the national average in high profit specialties such as cardiac care, orthopedics and cancer. Minnesota hospitals have 28 percent more cardiac intensive care beds than the national average and only 60 percent of the national average for psychiatric care beds. Minnesota hospitals have greater than the national averages for most specialty care and only 85 percent of the national average for general medical and surgical care hospital beds.

Researchers at Dartmouth University and others have shown that such excess capacity leads to overutilization of health care and worse outcomes, at higher cost. It also heightens the demand for registered nurses, particularly tertiary care nurses. Yet the amount we spend on registered nurses, technology, etc., should be based on NEED, not a medical technology arms race. Thus, hospital operating budgets (day-to-day care) get squeezed as funding is diverted to capital expenditures to stoke the medical arms race. Even within hospital operating budgets, administrative costs of dealing with a myriad of insurers also squeezes the clinical, day-to-day care budget. The nurse shortage is also due, albeit to a much smaller extent, to a shortfall in the supply of registered nurses, according to a 2002 healthcare workforce study by the Minnesota Department of Health: “The shortage is aggravated by a decrease in nursing program enrollment, high turnover and vacancy rates and an aging work force.”

For Minnesota, according to U.S. Health Resources and Services Administration estimates, the projected supply of FTE (full-time equivalent) RNs is expected to decrease between 2010 to 2020 as follows: 41,800 in 2010, 41,200 in 2015, and 39,700 in 2020, yet the projected demand for FTE RNs increases substantially: 46,200 in 2010; 50,400 in 2015; and 55,300 by 2020. These same trends hold nationally.

Hospitals claim the average full-time registered nurse makes $79,000. Yet most nurses don’t work full time given the labor intensity, with average income at $62,600. Compare that to the grossly excessive compensation for the following hospital CEOs in 2008: Allina’s Richard Pettingill, $1,738,237; Fairview’s Mark Eustis $1,102,008; Park Nicollet’s David Wessner, $995,280; and HealthEast’s Timothy Hanson, $1,122,793. Nurses AND other non-physician healthcare practitioner labor costs are estimated by the Minnesota Department of Health at 3 percent of total Minnesota healthcare spending. Hospitals also claim that labor costs, including salary and benefits, account for 61 percent of a hospital’s operating budget. This omits the role of the hospital’s capital expenditures budget leading to excess capacity. In 2007, Minnesota’s hospitals reported $1.1 billion in major capital expenditure commitments. In 2008, when the recession hit, this sum was still substantial totaling $458.3 million. The hospitals’ claims that fixed ratios to pay for more nurses would render hospitals insolvent is fallacy and has not been the case in California where such ratios have been implemented. Hospitals can cut back on their capital spending.

Because hospitals buy up other hospitals and clinics, the Twin Cities is left with only three major hospital chains, each owning five to 15 hospitals and up to 40-50 clinics, accounting for the vast majority of market share of patient admissions. Allina also owned the large insurer Medica until the attorney general ordered it split off several years ago. Almost all children’s hospitals have also consolidated.

Consolidation occurred substantially in response to the takeover of health care in Minnesota by a few large monopolistic HMO insurers in 1993. Such consolidation gave hospitals better bargaining power in relation to insurers, ability to overcharge uninsured patients, and to shift costs to insured patients. The lack of price competition prompted state legislation in 2005, mandating that hospitals post their prices on their websites to induce greater transparency and promote competition.

Yet from 1995 to the present, the net income of Minnesota hospitals has averaged about $500 million per year, or 6 percent of total revenues. By comparison, the average profit rate for the median Fortune 500, the largest U.S. companies, is 4.9 percent of revenues. This profitability holds for the hospitals within the metro area.

All but five of Minnesota’s 140 hospitals are incorporated as private nonprofits. In 2005, the Minnesota Department of Health valued the total tax exemptions for Minnesota’s nonprofit hospitals (including property, sales, Federal, State, tax-exempt debt, and tax deductibility of contributions) at $482 million, 5 percent of operating expenses, yet the required community benefit provided by hospitals as a condition of nonprofit status only amounted to $191.2 million in uncompensated care (charity care and bad debt), just 2 percent of operating expenses. A substantial share of uncompensated care is provided by a few safety net hospitals like Hennepin County Medical Center. In response to hospital overcharging, and aggressive billing and collections practices, in 2005, the uninsured filed federal class-action law suits. The tax-exempt status of hospitals was challenged, and two congressional committees, Ways and Means and Senate Finance, held hearings to determine whether the tax-exempt, nonprofit status of private hospitals justifies the minimal amounts of uncompensated care hospitals provide while overcharging other patients.

Economists estimate hospital administrative costs at 30 percent of total revenues. An indication of the magnitude of hospital administrative costs is revealed by the numbers of employees hired to do billing and marketing versus the hiring of nurses and doctors. Between 1970 and 2009, according to Bureau of Labor Statistics data, while growth in the number of registered nurses and physicians has stayed relatively flat or decreased somewhat given population growth, the number of hospital and other healthcare administrative positions doing insurance billing, insurance pre-certification for admission, prior authorizations and the like has increased by 3000 percent!

The 12,000 Minnesota nurses courageously opened public debate by exposing
how hospitals operate financially, along with the lack of safety, quality of care and participatory decision-making. The 2001 and 2010 nurses strikes were two in a long line of labor union strikes over the last 10 years primarily concerning health care and symptomatic of the overall healthcare crisis which needs to be fundamentally resolved, yet doing so at the bargaining table appears unlikely. Others include hospital service employees, transit workers, three schoolteacher strikes in Red Wing, International Falls and Crosby-Ironton, clerical workers at the U of MN, state employees, hotel and restaurant employees, Pepsi workers, janitors, airline workers and many more.

Ultimately, a one-payer, government-funded system to streamline administration and expand capacity for the practitioner workforce, with separate global budgets for day-to-day operating expenses and for big ticket item capital expenditures (both based on need) will solve the healthcare crisis. But fixed nurse/patient ratios, as has already been implemented in other states, would be an excellent first step in getting there.

Joel Albers, Pharm.D., Ph.D., Clinical Pharmacist, Health Economics Researcher Univer-sal Health Care Action Network—MN Community/-University Collaborative Re-search. www.uhcan-mn.org.