Nurse Strikes Cost Allina $105M

Nurse Strikes Cost Allina $105M

The health system brought in about 1,200 replacement nurses during the two strikes this summer and fall.

The nurse strike at Allina Health’s hospital cost the organization $104.9 million during the first nine months of the year, according to financial disclosures released on Monday.
 
Nurses at five Allina hospitals went on strike twice this year after their contract expired at the end of May and the two sides feuded over whether nurses should be required to move from their union health plans to Allina’s own plan. A seven-day strike was declared in late June, followed by an open-ended strike that started on September 5 and went until a new contract was approved on October 11.
 
Both times, the health system called in replacement nurses to fill in at Abbott Northwestern, Phillips Eye Institute, and Mercy, United and Unity hospitals. The first strike cost the organization $20 million, while the second was approximately $84 million.
 
“While we had hoped to avoid these costs, at the end of the day we now have a sustainable cost structure for our health insurance benefits that both provides coverage for all of our employees, and allows us to reinvest more in the care we provide going forward,” said David Kanihan, Allina’s vice president of marketing and communications.
 
Nurses returned to work on October 16. Their new contract, which runs through May 2019, provides some benefit concessions like flexible spending account contributions but still requires members to move to Allina’s health insurance plan.
 
Despite the high cost of hiring replacement nurses—which included premium pay, as well as training, transportation and housing costs—Kanihan called the expense an “investment” and added, “Our number one priority during the strike was to continue to provide high-quality care to the patients and communities who depend on us.”
 
Even without strike expenses, operating income for the first nine months of the year fell 11 percent. After adding in those costs, operating income was a loss of $13.7 million, down from a $102.2 million gain during the same period in 2015. Despite that, investment returns helped bring the organization back into the black for revenues of $26.6 million.