Press Releases

Hospitals Profit from Labor-Management Committees

Share this page:

Contact: Brian Lustig (202) 331-5530 or Nan Gibson (202) 331-5546

Expanding employee participation in decision-making processes vital to hospitals well-being

Washington, D.C. – Cooperation between hospitals and unions in the form of labor-management committees will provide dramatic economic benefits for hospitals, according to a report released today by the Economic Policy Institute (EPI). The report finds that comprehensive cooperation across all unionized groups can translate into nearly an $80 increase in income per patient-day, compared to hospitals with no cooperative relations with unions.

In Committing to Care: Labor-Management Cooperation and Hospital Restructuring, Gil A. Preuss examines the role that labor-management relations play both in shaping the work practices adopted by hospital administrators and in determining the financial performance of hospitals. The report finds that labor-management committees ease the process of implementing new hospital practices in response to changing market demands in a manner that does not threaten the quality of patient care.

The author finds that the cooperation between labor and management leads to three critical outcomes:

  • Higher registered nurse staffing ratios for patients.
  • Higher levels of employee involvement throughout the hospital.
  • Better hospital financial performance.

The report finds that the development of cooperative relations between
management and just two occupational groups will correlate to an increase of $26 in income per patient-day while comprehensive cooperation across all union groups correlates with nearly $80 more in income per patient-day when compared to hospitals with no cooperative relations. Given that hospital income ranged from $147 to $284 per patient day during the course of the study, the existence of these committees provides a dramatic benefit to the financial performance of hospitals.

The author’s research also finds that wide differences in the level of employee involvement in both on the job and on cost-cutting and quality improvement teams reduce potential hospital gains. Preuss adds that a hospital’s ability to adopt new practices in today’s competitive market is severely constrained by these dramatic variations in employee involvement.

Based on these findings, the author makes the following recommendations for hospital administrators:

  • Hospitals and unions should form labor-management committees; and
  • Hospitals and unions should expand employee involvement and participation to all occupational groups.

Preuss’ report is based on a ten-year survey of hospitals in the Minneapolis/St. Paul area. The conclusions reached by the author in the report offer one of very few available models hospital administrators can use to guide them through the rapidly evolving health care structure.

A companion report, Sharing Care: The Changing Nature of Nursing in Hospitals, examines the effect of changes in nursing work organization on the patient care process and the quality of care.

- 30 -

Gil Preuss is a professor of Labor and Human Resource Policy at the Weatherhead School of Management, Case Western Reserve University. His research focuses on the role of information and skill in shaping work practices and organization outcomes. He received his Ph.D. in 1997 from the Industrial Relations/Human Resources group at the Sloan School of Management, Massachusetts Institute of Technology.

The Economic Policy Institute is a nonprofit, non-partisan economic think tank
based in Washington, D.C. Founded in 1986, EPI seeks to widen the debate about policies to achieve healthy economic growth, prosperity and opportunity in the U.S.

To order copies of Sharing Care and Committing to Care, contact EPI at 1-800-EPI-4844 or order online.