Nurse Staffing Goes Critical

As Group Health management wields its payroll scalpel, profits soar 28 percent.

by Stephanie Tate

As the U.S. muddles along without a national health-care policy, registered nurses are facing management tactics that reduce costs through the replacement of their jobs with less skilled staff.
This game of deadly chess - with jobs and sick patients as the pawns - is playing out close to home as nurses at Group Health Cooperative, the nation's 12th-largest health maintenance organization (HMO), fight for their survival. In March, nurses represented by District 1199 NW, Service Employees International Union, staged a one-day walkout that was countered by an alleged management lockout. Since then, the stakes have been rising with cheaper, less-skilled staff assuming more responsibility for increasingly sick patients. And the fewer nurses that remain are stretched to the breaking point.
Group Health's nurses have been working without a contract for more than a year. According to the union, Group Health has eliminated 200 nursing jobs in the past two years. The union currently represents about 1,500 registered nurses at Group Health.
The union has offered to take a wage freeze and wants retraining for laid-off nurses and job security provisions. Group Health refuses to agree to the demands on training funds, a ban on contracting out, or a successor clause applicable if Group Health merges with another medical organization. Meanwhile, Group Health is strengthening its links with non-union Virgina Mason and rumors of a merger between the two persist.
In an effort to gain public support, the nurses are raising concerns about patient safety in the wake of continued staff cuts.
"Nurses are very stressed over the short staffing, because no matter what the staffing is, nurses are going to try their utmost to give their patients what they need," said Jane Stein, a registered nurse from the critical care unit at Group Health.
"It's very hard to do that when you have twice as many patients to care for - we have as many as seven or eight instead of three or four," she noted.

Fewer Nurses, Sicker Patients
Group Health nurses, along with other nurses of the Hospital and Health Care Employees Union 1199 NW, staged a rally May 12 to voice their concerns.

During the rally, several nurses delivered a list of concerns to the Washington State Hospital Association calling for strong consumer protections, adequate and appropriate staffing, cost containment and disclosure of administrative costs, as well as reasonable limits on administrative salaries and hospital profits. The nurses also called for retraining programs for displaced registered nurses and a recognition of nurses' rights and obligations to advocate for their patients.
However, the key issue at Group Health is the replacement of registered nurses with lower-skilled personnel. Lower paid unlicensed "assistive personnel" cannot handle IV's, dispense medicine, or make formal assessments. Their typical work consists of bathing patients, changing sheets and taking vital signs. Using more "assistive personnel" is a lynchpin in health-care management's effort to lower costs and raise profits.
Management typically explains the practice as a strategy to "free up" skilled nursing staff to do more important work. Jay Gusick, of Group Health, says that the amount of time the nurses have at bedside is actually growing because they have hired more assistive personnel to aid the nurses in non-nursing duties.
Nurses see this practice not only as a threat to their jobs, but as a threat to patient care.
"There is a place for assistive personnel, the problem is that we're not interchangeable," said Linda Canny, a registered nurse from Group Health. "We each have a role to play, we each have a job to do. We are responsible for the assessment of the patient, for their discharge needs, for their IV medications, we really coordinate the patients care during the hospital stay. Our work is vital."
Another explanation for the nursing cuts according to Group Health is that the daily census report at Group Health's two hospitals last year showed 29 percent fewer patients than in 1993.
"As the hospital census keeps going down, you don't need as many staff in the hospitals - nurses, janitorial staff," Gusick said. "We are trying to get the right number of staff for each unit. This is difficult because we don't know where the daily census will bottom out."
Karen Zytniak of District 1199NW, SEIU, says that although the daily census has declined by 29 percent, the admission rates have declined by only 9 percent over the same period. This means that nearly the same number of patients are being treated, but the patients are staying a shorter time. The patients that are admitted are sicker because they are not admitted until they reach more advanced stages of their illnesses and they tend to leave the hospital after a shorter stay.
"We are sending home people that would have been admitted overnight in the past, patients that have had huge blood losses and nausea," said Pam Langlitz, a registered nurse from Group Health. "They end up coming back into the emergency room that night to be treated."

Temporary Part-Time
The nursing union also claims that in an effort to cut costs, Group Health management is cutting full-time nurses and replacing them with agency nurses, overtime and temporary part-time nurses.

Zytniak said Group Health used 34,878 hours of agency, temporary and overtime work in the last quarter of 1994. "This is equal to 67 full time positions," she said.
Group Health contends that given the competitive realities of a health-care marketplace, it has no alternative but to opt for part-timers.
"Temporary, part-time nurses allow us the flexibility we need until the correct number of nurses for each unit is assessed," said Gusick.
Temporary, part-time nurses are employees of Group Health and are represented by the union. They do not receive benefits, but earn a higher wage.
Of course, Group Health is not the only HMO experiencing labor strife as a result of changes in the industry and the rise of "managed care," where hospitals compete to serve HMO enrollees. Often, as at Group Health, the HMO and the hospital are one in the same. As employers demand lower HMO rates, HMOs and hospitals are squeezed to cut costs while trying to maintain quality of care. Nonetheless, HMOs have experienced record profits averaging 25 percent.
Group Health's 28 percent increase in profits last year has done little to draw the sympathy of nurses facing layoffs and increased patient-to-nurse staffing ratios.
In 1994, Group Health said profits rose to $34.5 million, up from $26.9 million in 1993.
The union reaction to Group Health's profits and its refusal to offer nurses a better deal has been unified. It has also been critical of Group Health's rising adminstrative costs.
John Sweeney, president of the national SEIU, said in a March 22 statement that Group Health, in "forcing registered nurses to strike in order to defend their jobs," is demonstrating "the kind of management insensitivity that is giving the managed care industry a bad name." HMOs are engaged "in a wrong-headed attempt to compete on price, rather than with the quality of care they deliver," he said.
On a national scale, even the conservative American Medical Association has expressed concern about profitable HMOs stashing cash at the expense of patients and staff.
"When money is removed from the health-care system, I don't look upon that with favor. We would like to see the money recirculated and used for patient care," Dr. James Todd, vice president of the AMA told the Wall Street Journal.
Despite claims of austerity, Group Health has ample cash reserves. Net worth increased in 1994 to $190 million from $157 million during 1993. Short-term investments, such as certificates of deposit, jumped to $46 million from $27.4 million; long-term investments, such as stocks and bonds, rose to $106 million from $89.8 million.
Recently, about 30 Group Health members formed a group called the Concerned GHC Consumers Organization to support the nurses. They say that Group Health is abandoning its consumer and union roots. The group will attempt to elect representatives to the cooperative's board of trustees in an effort to influence the direction of administrative policy regarding labor issues.

Non-Medical Overhead Rising
Also under fire at a time of supposed austerity are rising administrative costs. Signalling higher adminstrative overhead, Group Health spent 90.9 cents of each premium dollar on medical and hospital expenses in 1994, the lowest amount in five years. In 1993, it spent 92.3 cents according to an annual report prepared for the Washington State Insurance Commission.

Known as the "medical-loss ratio" - or the amount spent on medical services versus adminstrative overhead, Group Health's 90 percent ratio looks reasonable compared to other for-profit HMOs across the country that spend as little as 76 percent on medical costs. However, Kaiser Permanente in California - also a non-profit HMO that operates its own hospitals - reported a 96 percent ratio last year.
Some of that non-medical overhead goes to executive salaries and paper pushers. Group Health CEO Phil Nudelman was paid $ 433,707 in total compensation in 1994. (Nudelman's pay compares with $ 487,276 in total compensation for Betty Woods, CEO of Blue Cross of Washington and Alaska; and $753,662 for Winlock Pickering, CEO of King County Medical Blue Shield.)
Nudelman is now a veteran hard-liner when it comes to labor issues. During a nurses strike in 1989, then chief operating officer Nudelman advised Group Health members to cross the nurse's picket line and warned that Group Health would not reimburse members who sought medical services elsewhere.
Later, he denied that Group Health sought to permanently replace striking nurses with out-of-state replacements, in violation of a state statute governing striker replacements. Group Health did hire about 60 temporary nurses, including 25 from out of state.
"Our main interest is taking care of enrollees, we aren't looking to permanently replace anyone," Nudelman told the Seattle Times.
This time around, Group Health management is not making the same claim. They say with fewer patients staying shorter periods of time in the hospital, coupled with pressure by businesses to cut costs in the industry, they cannot offer the nurses a more generous contract.
"What the nurses ignore are the pressures brought on by the people who purchase insurance and health care," said Group Health spokesman Jay Gusick.
Nurses say this philosophy puts patients at risk.
"Sometimes patients (receive) less than optimal treatment because of cost containment measures, and end up getting worse," said nurse Jane Stein.
"In addition, they are discharged much sooner than they have been in the past, so they may not be as stable as they should be to go home," she added.

Stephanie Tate is a Seattle writer. Eric Nelson edited and contributed to this story.



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Contents on this page were published in the June/July, 1995 edition of the Washington Free Press.
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