OHSU Leaders Mull Cuts to Employee Benefits as Budget Shortfall Looms

The possible reductions come just months after leaders handed out $15 million in bonuses.

(Brian Burk)

What a difference one winter makes.

Last fall, Oregon Health & Science University president Danny Jacobs was cutting bonus checks totaling $15 million to 2,000 non-union employees to thank them for their hard work. They weren’t based on performance. Staff just had to show up.

Around the same time, OHSU chairman Wayne Monfries finalized a new two-year contract with Jacobs that poured an extra $700,000 into his retirement account. Both moves came just months after OHSU said it would pursue a merger with crosstown rival Legacy Health.

The good times, it seems, were rolling. Now they aren’t. On June 10, OHSU started notifying some of its 21,300 employees that their jobs were being cut because the cost of wages and supplies like bedpans and oxygen tanks were outstipping revenue from clinic visits and surgeries.

The bloodletting is starting with a pin prick. Just 142 employees began getting pink slips on Monday. But in a notice to the state that’s required if more than 500 workers are going to get the ax, OHSU said there were more layoffs to come in the next three months.

The cuts are roiling Pill Hill. Employees wonder how the university can shower cash on some employees and cushion Jacobs’ retirement, then turn around and slash staff.

“OHSU needs to get its priorities straight and focus on expanding services to our communities, not cutting the jobs and benefits of people who actually make our health care system work,” the Oregon Nurses Association, which represents 4,500 workers at the university, said in a statement.

There’s more bad news for employees outside the executive suite. OHSU is trying to figure out how to balance the books, and, in addition to layoffs, it’s eying employee benefit cuts for the year beginning Jan. 1.

In March, OHSU chief financial officer Lawrence Furnstahl joined a meeting of the Employee Benefits Council, a group of staffers who consult on the matter, to tell them that the cost of benefits could grow just 8% in the coming year. Without cuts, they would rise 11.5%.

“I am all for paying all of our employees well,” Furnstahl said at the meeting, in a video obtained by WW. “But we have to find revenue to cover them.”

A chart presented at the meeting shows that the total cost of benefits per employee is expected to rise just $5 to $14,012 this year. But the amount paid by employees is forecast to rise $329 to $1,992. Paycheck contributions would rise $50 to $1,077.

The benefits council dug into the numbers at another meeting in April, and things got tense. After presenting data showing that OHSU contributes more to employee benefits than most companies its size, executives from human resources rolled out options for keeping the cost of benefits from growing more than 8%. They included higher deductibles and higher co-pays for drugs and for visits to doctors’ offices and emergency rooms.

The benefit cuts are galling because OHSU is in the health care business, says Jennie Olson, president of the American Federation of State, County and Municipal Employees Local 328. “OHSU is the premier health care provider in the state, and they should be covering their employee insurance.”

Among other things, the university is incentivizing employees to get care in-house by making copays and deductibles lower there than at outside providers. In the industry, that’s called “domestic steerage.” But care is constrained at OHSU, and people have trouble getting appointments, according to a number of employees, a situation that could get worse with layoffs.

“As with most employers, OHSU is seeing significant increases in the cost of the benefits it offers its employees,” spokeswoman Sara Hottman said in an email.

To stick with the 8% increase it’s aiming for, OHSU would need to find $12 million in savings in the benefits year that starts Jan. 1, figures provided by Hottman show.

Concern about cuts roiled an open house on benefits conducted online June 3, according to a transcript of the chat from the meeting. Participants asked how OHSU could pay for bonuses for non-union employees, give Jacobs a bump for his retirement, and sign a billion-dollar deal to merge with Legacy, but couldn’t afford to maintain benefits for rank-and-file workers.

“To HR and Dr. Jacobs: if you can’t afford to maintain the benefits our your current employees, then you can’t afford to buy Legacy,” wrote one person in the chat.

“My friend has better benefits working for a gas station,” said another.

“The wait time on care is really bad,” wrote yet another. “I was convulsing and bedridden and had to wait 9 months to see a neurologist.”

Complaints turned to snark when the subject was “Pulse Cash”: credits that employees can earn for doing healthy things like meditating, exercising and tracking blood pressure and weight. The credits can be used to purchase yoga mats and other stuff. The system was started by Virgin Group, the same company that runs the airline. It’s called Personify Health after a merger in February.

“I’ll give my Pulse Cash to my son so he can use it for Fortnite,” one person said in the chat. Another asked about the conversion rate to Schrute Bucks, the tokens cooked up by Dwight Schrute on The Office, to motivate employees.

“We don’t need a gamified system to be healthy,” wrote another participant. “We need affordable access to the healthcare system we run.”

Without that, OHSU is likely to face a long summer of discontent as it struggles to balance its books, manage layoffs, merge with Legacy, and retain the people it wants to keep.

AFSCME started a petition demanding that management keep out-of-pocket costs steady, expand benefits for fertility, cover new weight-loss drugs, and “prioritize employee benefits over executive compensation and bonuses.”

It has almost 3,000 signatures so far. The union plans to present it to the OHSU board at its meeting on June 28.

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