Key hurdle to Alameda Hospital affiliation deal cleared

by Michele Ellson Monday, September 16, 2013 – 00:05

Efforts to combine the operations of struggling Alameda and San Leandro hospitals with the public Alameda Health System cleared what proponents called a critical hurdle on Friday when Governor Jerry Brown signed a bill that addresses workers’ pensions.

The bill, co-authored by Assemblyman Rob Bonta, D-Alameda, and Assemblywoman Joan Buchanan, D-Alamo, eliminates the requirement that full-time workers from the two hospitals become eligible for a county pension when the deals close and they become employees of Alameda Health System. It also allows employees of the two community hospitals who work half time or more and are enrolled in pension plans now to maintain a pension benefit.

Instead of joining the Alameda County Employees’ Retirement Association – or, ACERA – unions representing employees at Alameda Hospital and San Leandro Hospital will consider alternate pension plans as they bargain with Alameda Health System management for new contracts.

“This bill was an absolutely critical piece to get the deals completed,” Bonta said during an interview Saturday.

The merger and affiliation deals have been billed as the best option for saving a pair of valued but struggling community hospitals – and the jobs they provide – and as an opportunity for Alameda Health System to expand its service offerings and geographic reach as the implementation of health care reform forces the public system to compete for patients who have historically had no other options. The existing system includes Highland and Fairmont Hospitals, John George Psychiatric Hospital and four wellness clinics.

Alameda Health System’s managers had already been working to put cheaper retirement plans in place, before proposed efforts to acquire San Leandro Hospital and affiliate with Alameda Hospital came about, AHS’s Chief Human Resources Officer, Jeanette Loudon-Corbett, said.

The public health system formerly known as Alameda County Medical Center split off from Alameda County in 1996, but its full-time employees remained enrolled in the county retirement plan, she said. Adding the 473 full-time workers from San Leandro and Alameda hospitals who would have been eligible for the county pension plan would have cost Alameda Health System more than $3 million a year, she said – more than it could afford.

“Looking at potentially affiliating with these two hospitals, we knew we would not be able to do the affiliation with a benefit rate as high as what it is with ACERA,” Loudon-Corbett said.

At the same time, leaders of the eight unions representing workers at San Leandro and Alameda hospitals were concerned that the part time workers who make up the majority of both hospitals’ staffs would be left out in the cold if the deals went through. Fran Jefferson, regional director of Service Employees International Union Local 1021, said that 189 part-time pharmacists, nurses, dietary and other workers at San Leandro Hospital could have found themselves without a pension if an expected transfer from Sutter Health to Alameda Health System goes through.

“We have to protect people who are already in the (pension) plan,” Jefferson said.

The transfer of San Leandro Hospital is supposed to be finalized by October 31, while an agreement to affiliate Alameda Hospital with AHS is expected to be completed by the end of this month, with the affiliation slated to go through in early 2014. After those deals are completed, union leaders and Alameda Health System management will hash out pension deals as they bargain over new contracts.

Alameda Hospital’s workers are expected to become employees of Alameda Health System within two years of an affiliation deal closing, Loudon-Corbett said.

Pension plans that could be considered include defined-contribution plans like the 403(b) and 457(b) plans Alameda Health System’s leaders have already put in place for newly hired workers, and union-managed trusts that are funded by multiple employers. For example, Loudon-Corbett said that Alameda Hospital’s nurses are already part of the steelworkers union’s pension trust.

One critical aspect of the bill for Bonta, a onetime Alameda Health Care District Board member who is forging a reputation as a strong supporter of unions, was obtaining the buy-in of both unions and management. The bill received the official support both of Alameda Health System and of all eight unions whose members will be affected by the mergers.

“Everyone is sensitive to what may look on the surface like a watering down of pension plans. It’s not that at all. We would never agree to that,” Jefferson said. “We want to make sure everyone understands what they’re getting.”

The rising cost of public workers’ pensions – and public agencies’ growing struggles to pay for them – has given rise to a wealth of efforts to slash costs, some collaborative and some unilateral efforts initiated by local lawmakers.

“I think a collaborative approach is critical, that workers should continue to be made whole, and not be imposed on,” Bonta said. “We were able to achieve a solution where workers were able to remain whole, and not give up the benefits they have.”