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Allina Health spent $105 million on two nurses' strikes in 2016, system says

Hefty price tag is "regrettable," but worthwhile as end result is "more sustainable cost structure for insurance benefits," Allina spokesperson says.

Beth Jones Sanborn, Managing Editor

Photo by <a href=""> Union Advocate </a>Photo by Union Advocate

Two strikes by thousands of nurses at Allina Health's Twin Cities hospitals in 2016 cost the Minnesota health system almost $105 million dollars, system spokesperson David Kanihan said Tuesday.

The $104.8 million price tag encompasses costs for a seven-day strike in June, and the most recent one where nurses walked off the job on Labor Day and didn't return until mid-October. That figure does not include expenditures for the month of October, the first two weeks of which nurses were still on strike.

Kanihan said Allina spent $20 million for more than 1200 replacement nurses for the June strike, as well as $84 million for the September segment of the most recent walk-out. The figure includes the cost of transporting many nurses who came from out of state, as well as training, housing and local transportation.

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[Also: Minnesota nurses strike hits one week with no end in sight]

Kanihan could not discuss Oct costs, as the figures haven't been released yet. However, he said that on average, the strike cost the system about $20 million a week.

He said the $105 million was a necessary expense, but one they would not have chosen otherwise. However, he said now all Allina employees are on the same set of core health plans, plans he calls competitive and high quality that have been rated "gold plus" by a Kaiser Family Foundation analysis.

"We look at it as an investment in a sustainable cost structure for insurance benefits going forward. We now have just that."

"That's a staggering amount of money for a nonprofit dedicated to patient care to commit to fighting workers. One has to wonder how they even stockpile that much cash," Minnesota Nurses Association Executive Director Rose Roach said in a statement.

[Also: Nurses strike averted at Brigham and Women's Hospital]

The plans nurses previously participated in, and will be moving away from, have higher premiums but lower co-pays and deductibles. The plans they are moving to have lower premiums which is less money out of employee paychecks.

Negotiations had grinded to halt after nine months of talks. The MNA and Allina finally struck a deal in mid-October that meant MNA nurses would transition to Allina's corporate plans, but Allina agreed to make payments into flexible spending accounts and gave assurances that the benefit levels of Allina's largest health plan wouldn't change, MNA confirmed.

"They do have higher co-pays and deductibles, but in modern health plan design these plans are competitive and are working well for 30,000 other allina employees," Kanihan said.

He said the system is projecting savings of $10 million a year with nurses moving over to the corporate health plans, and that figure is independent of other costs that were possible, including the cadillac tax.

[Also: Strikes called by same union at three major hospital systems nationwide]

Kanihan said the previous health plans nurses were on would have met the threshold to be subject to that tax, though its provisions of "somewhat unclear".

"We had maintained all along that cadillac health plans were not sustainable. They were rising in cost year after year. They don't exist in very many places anymore."

Kanihan confirmed Allina still made money in 2016, thanks in part to $73 million in investment returns.

The contract affects roughly 4,800 nurses at Abbott Northwestern Hospital and the Phillips Eye Institute, United Hospital, Mercy Hospital, and Unity Hospital. 

Twitter: @BethJSanborn