From: Ben Drew On Behalf Of JMH CEO
Sent: Monday, May 18, 2015 7:46 AM
Subject: John Muir Health's Position on the Local 39 Strike at JMMC, Walnut Creek
This morning, 19 of our engineers represented by Local 39 went out on strike at the Walnut Creek medical
center. This is not the outcome we had hoped for as we sought a resolution at the bargaining table, but the
sticking point continues to be placing our engineers in the Local 39 pension plan. We respect the skills of our
engineers and the important work they do, but we will not change our position on the pension issue for a
number of reasons.
We fully realize that many of our engineers at Walnut Creek voted for representation by Local 39 in the belief
that it would allow them to participate in the union’s pension fund. We made it clear prior to the election that
we could not envision a scenario where we would agree to that demand. The union agrees that the pension is
the major issue and the core reason why there has been breakdown in negotiations. As a reminder, we are
negotiating the first contract for the engineers at Walnut Creek. The law requires three things in collective
bargaining: meet at reasonable times, bargain in good faith, and put agreements in writing if either party
requests it. The law does not, however, compel either party to agree to a proposal by the other, nor does it
require either party to make a concession to the other.
Throughout the negotiations, we made our position on the pension issue clear, including in the 16th and most
recent bargaining session on May 13. We also provided the information below directly to our Walnut Creek
engineers.
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The Local 39 pension plan is a very expensive benefit. It’s far more expensive than the current
pension benefit under the John Muir Health (JMH) Plan. The Local 39 plan requires JMH to pay 16% of
the engineers’ hourly rate into the fund with no less than 3.3% increases every year. This is significantly
more expensive than most pension plans—even other union plans. At a time when we are working to
become more affordable so patients can access our great care, we have to make considered and
responsible financial decisions
We believe the Local 39 pension plan provides a disproportionate benefit that is different than what
we provide to 95% of employees at JMH. Our goal is to treat employees fairly and consistently,
including in the area of benefits. We strictly oppose the concept of allowing a sharply different pension
benefit for certain employees and not others.
We believe the future of the Local 39 pension fund is uncertain. In 2010, the fund’s actuary certified
that the fund was in “Critical Status” and had to come up with a “Rehabilitation Plan” to try and ensure
that it would remain solvent. The plan will be in rehabilitation until at least 2020. The “Rehabilitation
Plan” assumes that the already very high premium contributions by employers are going to increase by
at least 3.3% each and every year, which is unrealistic.
The health of the Local 39 pension plan depends on the continuing financial health of employers
beyond John Muir Health. Given the pressures on today’s health care industry as evidenced, for
example, by the recent closure of Doctors Medical Center in San Pablo and the highly publicized
financial condition of the Daughters of Charity Health System, we believe the assumptions in the Local
39 plan are unrealistic. As more employer participants in the Local 39 pension plan struggle to maintain
their contributions, the burden on the remaining employer participants, including JMH, becomes even
greater. For example, with DMC closing, JMH and other employers are required to pay to make up for
the payments no longer being made by DMC to the plan. The liability will only increase if we placed the
Walnut Creek engineers in the plan, which hurts the rest of the health system and creates a significant
future liability.
We believe all JMH employees deserve a retirement plan that is able to deliver on its promises.
When you eventually retire under the JMH plan, we are confident that your retirement benefit will be as
promised because our plan is conservatively managed and provides a benefit level that is
sustainable. Never in the history of the JMH pension plan has a “Rehabilitation Plan” been imposed due
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to funding shortages. Indeed, our most recent Annual Funding Notice issued to employees confirms the
funding status at 98%. The Local 39 pension plan is at 80%, a level just above “critical funding status”
as determined by the Federal Pension Protection Act and dependent on the 3.3% annual payment
increases.
We inherited the Local 39 pension plan at Concord—we did not choose it. Local 39 leaders have
continually stated that the Walnut Creek engineers do the same work as the Concord engineers so they
should have the same pay and benefits. When John Muir Health acquired the former Mount Diablo
Medical Center, we had no choice but to accept the Local 39 Pension Plan at that time—in fact, it was a
condition of the sale. Our ongoing concerns about the financial health of the Local 39 Plan are the
reason we gave notice to Local 39 and our Concord engineers that we intend to withdraw when the
contract expires, two and a half years from now. This is why we sought and agreed on a shorter contract
in order to provide a transition period for our Concord engineers.
It is often said that no one “wins” a strike. We respect our engineers’ right to strike, but we remain hopeful that
an agreement can be reached that does not include the Local 39 pension plan. We have a history of maintaining
constructive relationships with the unions representing our employees and we would welcome our engineers
back so they can continue to provide their services to the Walnut Creek medical center.
It's difficult to see valued colleagues striking, but, as we always do, we will continue to provide the care and
service our patients and the community expect and deserve. We have an effective plan in place to ensure safe
access to the Walnut Creek medical center for our patients, physicians, staff and volunteers. Thank you for the
exceptional care you provide every day.
If you have any questions about the strike, please contact your director or the Strike Command Center at (925)
941-3001 (extension 33001).
Sincerely,
Cal Knight
President and CEO