"Oh, dear, oh, dear, oh, dear!"

August 19, 2005 -- Today the Silicon Valley/San Jose Business Journal published a fairly long, interesting piece by Laura Cutland about hospital industry concerns over "generous" nursing compensation packages. The story focuses on a recent Catholic Healthcare West contract that raised nurse salaries and "codified" state-mandated staffing ratios in 12 Northern California hospitals. The piece, "Catholic Healthcare contract worries other hospitals," seems to place undue emphasis on management-side concerns. Much of it consists of vague, sky-is-falling assertions from some hospital executives about how unsustainable nursing salaries and staffing may become in the future. Nursing is presented as a troublesome cost of doing business, rather than a profession that is critical to patient outcomes and the main reason hospitals exist. The piece fails to supply any actual facts (e.g., widespread hospital closures) to support the impending doom scenarios, nor the piece's assertion that the state's "nursing shortage shows no signs of relief."

The piece's main theme is that "industry members and other experts" are worried about the direction that nursing compensation and staffing is taking. Hospitals are worried that the deal signed by Catholic Healthcare, which includes an average 26% pay raise over four years and is one of the first to incorporate the staffing ratios, "could set a precedent" of "generous" packages as hospitals "scramble to lure nurses and contend with the growing clout of the California Nurses Association [CNA]." The piece includes one paragraph with quotes from CNA negotiator Joe Lindsay. He argues that the industry is "extremely profitable" and so agreements like the Catholic Healthcare one are needed to "keep nurses in a tough, high-turnover profession" that is seeing more obese and acutely ill patients. But the great majority of the piece consists of quotes and statements of the views of hospitals, who complain that the contract "looked really generous," that "it's hard to sustain those increases year after year," that such increases are "driving up the cost of health care," that hospitals' ability to "balance [their] budgets" is "constantly challenged by compensation packages," and that if current trends continue, hospitals will have to cut services. The piece notes that hospitals are also concerned about the state staffing ratios, which require a 1:5 ratio on medical/surgical units, and which Gov. Schwarzenegger's administration has so far been unable to overturn. To its credit, the piece notes that Kaiser Permanente has taken the lead in staffing its med/surg units with 1:4 ratios, which "executives there say has given them an edge in recruiting nurses." The ratios are not yet in Kaiser contracts, though CNA reportedly plans to seek that next year. But the piece notes that Catholic Healthcare is now "locked into staffing at those levels even if the ratios are overturned," a "gamble" that another local hospital wasn't willing to take. Curiously, the piece has no quotes from Catholic Healthcare itself, and it does not say that it tried to get any.

The piece does not mention what direct effect the staffing ratios have had on patient health or nurse recruitment in the state. It provides no data to support its claim that the shortage in California "shows no signs of relief." Nor does it provide any data to rebut the CNA's assertion that the hospital industry remains profitable, nor any reason that Catholic Healthcare would have signed a contract that it could not afford. In fact, research has shown that nurse staffing has a significant effect on patient outcomes, and that adequate nurse staffing is a cost-effective way to save lives, since it improves outcomes, reduces errors and liability costs, and reduces nurse turnover and temporary staffing. (See our FAQ on nurse staffing levels.) The piece does not provide the salaries of the Catholic Healthcare nurses, only the total increase over the four year contract, which makes the increase seem high without actually disclosing what the nurses make. In any case, it's true that the salaries of nurses in the Bay Area--where nurses reportedly start at $75,000--are high relative to the amount of formal training required. But those salaries reflect the high local cost of living, and the difficulty of finding nurses willing to endure the often-abysmal working conditions of the managed care era. Of course there are more specific arguments that can be made about financial stresses on hospitals today, but this piece relies on what amounts to a series of vague warnings. And why are there no panicked quotes from Catholic Healthcare or Kaiser--do they feel more able to staff adequately because of economies of scale? Will the staffing crisis drive industry consolidation?

We thank Ms. Cutland and the Business Journal for covering these important issues.

See the article "Catholic Healthcare nurse contract worries other hospitals" in the August 19, 2005 edition of the Silicon Valley/San Jose Business Journal.