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St. Peter's chops employee perks
Retirement plan contributions, merit pay to be eliminated in 2009

By CATHLEEN F. CROWLEY, Staff writer
First published in print: Saturday, December 6, 2008

ALBANY – The ripples of the global economic downturn struck another Capital Region institution Friday when St. Peter's Health Care Services said it will eliminate merit pay in 2009 and suspend matching contributions to employees' 403(b) retirement plans.
     
Officials at the $450 million hospital system said the reductions will not change the plan to construct a new building and renovate parts of the existing building.

Employees were handed a memo explaining the changes as they changed shifts at 3 p.m. on Friday.

Workers were upset, said a three-year employee who did not want to be identified. The top executives recently moved into new offices on the fifth floor and the hospital is putting $275 million into the expansion.

"Why don't they cut back on the new building?" she said.

The memo from President Steven P. Boyle to workers said that the building project is key to St. Peter's long-term success. Private insurers have agreed to higher reimbursement rates to help pay for the building project, adding $10.2 million to the hospital's coffers this year. The hospital is dipping into some of that money to cover operational costs, hospital spokesman Elmer Streeter said.

The hospital is $3.2 million short of breaking even, according to the memo.

Eliminating merit pay will save St. Peter's $2.3 million and applies to all employees including the top executives.

Suspending the matching contribution to the 403(b) plan will save $1 million. The plan is the not-for-profit version of a 401(k). About 1,200 employees participated and the hospital matched contributions up to 1.25 percent of an employee's salary.

However, the hospital made no changes to its pension plan, Streeter said. Nearly all of the hospital's 4,622 employees are eligible for the pension, whether they participate in the 403(b) plan or not. It takes three years to fully vest in the plan. The hospital guarantees that the pension fund will earn 6 percent each year. Because of the drop in the stock market, St. Peter's expects to make an unbudgeted $4 million contribution to the plan, Streeter said.

The hospital also has cut advertising, travel to conferences, overtime and the use of temporary nurses, according to the memo.

As the economy sours, Streeter said, the hospital has seen a slight decline in the patient discharges and the number of patients having elective surgery. He declined to share the hospital's discharge numbers, however.

When the state legislature convenes next week, hospitals statewide may see cuts to Medicaid reimbursements that would put more pressure on their finances.

"Hospitals across New York are considering changes, whether it be to capital projects, hiring freezes, cutting existing services or layoffs as a way to deal with the current economic climate," said Mike Fraser, a spokesman for ......................................http://timesunion.com/AspStories/story.asp?storyID=747364&category=BUSINESS