Most Medical Center employees fare well under codified autonomy
|More than 98 percent of Medical Center employees have received merit-based increases in each of the past seven years, although some critics of the Charter proposal suggest otherwise.
By Dan Heuchert
The suggestion from critics of the University’s Charter initiative that Medical Center employees have received only a 4 percent raise since 1998 should surprise at least one constituency: Medical Center employees.
Records show that the vast majority of hospital employees received salary increases in five of the last seven fiscal years, and bonuses in the other two. In fact, according to the records, most Medical Center employees have fared as well as — and in many cases, better than — state employees since the U.Va. Medical Center took charge of its own compensation plan six years ago.
The Medical Center salary issue has some bearing on the debate about the Charter proposal, under which U.Va., Virginia Tech and the College of William & Mary are seeking greater freedom from the state in exchange for foregoing some future state funding.
In their efforts to explain the proposal, U.Va. officials have pointed to the state’s 1996 grant of “codified autonomy” to the Medical Center as an example of the benefits that greater flexibility can provide.
Before codified autonomy, some state legislators suggested the University sell the hospital, University President John T. Casteen III said at a Nov. 9 Charter information session. Instead, under the codified autonomy measure, “We went from managing the hospital as though it were a line state agency to managing it as though it were a hospital.”
Casteen acknowledged that the comparison between the academic division under Charter and the Medical Center under codified autonomy is not apples-to-apples,. The Medical Center’s human resources and compensation systems are designed for the health care market, and thus may not provide a useful template for nonmedical employees.
“There are a lot of reasons why we’re not simply asking that the whole University be under the statute that applies to the hospital,” Casteen said. “One is that the rest of the University’s not a hospital.
“... I do think that on balance anyone who works there is going to say it’s a vastly better hospital than it was before, or could have been before.”
Charter critics have seized upon the Medical Center comparison to make their “4 percent-raise-in-the-past-seven-years” charge, suggesting that academic-side employees may lose financial ground under the Charter proposal. The only increases they have recognized are across-the-board raises; they have chosen to ignore merit-based increases granted to more than 98 percent of Medical Center employees.
In a letter to the Daily Progress dated Nov. 20, R. Edward Howell, vice president and chief executive officer of the Medical Center, wrote: “These comments are largely anecdotal and do not represent what has occurred in the compensation of Medical Center employees since the enactment of codified autonomy in 1996.”
At issue are “variable” salary increases. Under that system, the overall salary pool is increased by a specified amount. How much of that increase an individual employee receives is determined by two factors: his or her annual performance review and the market rate for their skills.
For example, during the current fiscal year, administrators approved a 3 percent variable increase for Medical Center employees that was then allotted on the basis of performance reviews. “Outstanding performers” received 5.5 percent raises; “peak performers” received a 4 percent raise; and those who were “commendable” received 2.5 percent. Only those rated “needs improvement” — fewer than one out of every 100 reviewed — received no increase at all, according to Medical Center records.
During the same time period, state employees received a 3 percent, across-the-board increase. More than 54 percent of Medical Center employees received increases exceeding that amount, the records show — the 9 percent who were rated “outstanding performers” and the 45.6 percent who were rated “peak performers.”
Consider the case of two hypothetical nurses in 1997, one in the U.Va. Medical Center and one in a state agency, both of whom earned $36,370 — then the midpoint in the salary range for a Clinical Nurse II. According to figures compiled by the Medical Center, the U.Va. nurse — with an outstanding performance record — would now be earning $54, 257, a 40 percent increase, while the state nurse would be making $43,209, an 18 percent increase.
Similarly, a state employee who earned $30,000 in 1997 and received only state-authorized increases or bonuses would be receiving $35,641 this year. A Medical Center employee who received only the amount of the variable increases would be making about $160 more, while an outstanding Med Center employee in a market-driven position would be making $44,754, or $9,113 more, according to the analysis. (Market-driven positions are those positions for which demand outstrips supply. Currently, nurses, radiology technicians and pharmacists — who account for about 1,750 positions at the Medical Center — qualify, said Jeff Chitester, an administrator in the Health System’s human resources department.)
Taking a closer look fiscal year-by-fiscal year:
• 1998: State employees receive a 4.55 percent raise. All Medical Center employees receive a 2 percent increase, plus 1 percent for discretionary increases.
• 1999: State employees receive a 4.5 percent increase. Medical Center employees split a 4 percent variable increase, with individuals receiving between 3 percent and 10 percent.
• 2000: State employees receive a 3.25 percent increase. Medical Center employees split a 4 percent variable increase, with individuals receiving between 3 percent and 8 percent. Only the 2 percent of Medical Center employees who were rated “needs improvement” receive no increases.
• 2001: State employees receive no increase. Medical Center employees split a 4 percent variable increase, plus an equity adjustment, with individuals receiving between 3 percent and 8 percent. Only the 1.1 percent of Med Center employees who were rated “needs improvement” receive no increases.
• 2002: State employees receive no increase for the second straight year, but are given a choice between a 2.5 percent, one-time bonus or 10 days of paid leave. Med Center employees are awarded a 2.5 percent bonus.
• 2003: State employees receive a 2.25 percent increase. Medical Center employees receive a 1 percent bonus, plus a market adjustment — determined by demand for their skill level — of between 1 percent and 7 percent.
• 2004: State employees receive a 3 percent increase. Medical Center employees receive a 3 percent variable increase, ranging from 2.5 percent to 5.5 percent per individual.
In his letter to the newspaper, Howell said the numbers offer a clear message.
“Simply stated, the capacity afforded to the Medical Center to more fully direct its own affairs means that we are able to properly reward our employees who do a great job in caring for our patients,” he wrote. “The facts clearly support this statement, and all the anecdotes that are being used by a vocal minority will not change that.”
|Timeline for Chartered Universities Legislation
|1The General Assembly opens its 2005 session on Jan. 12. Legislators will introduce the drafted charter bill before the Jan. 21 deadline. The session is scheduled to last 46 days. The charter legislation will be examined by committees in both chambers, and will be approved, modified, killed or tabled before the scheduled adjournment on Feb. 26.
|2 If legislators approve all or part of the bill, and the session adjourns on time, Gov. Mark Warner must act on it by March 28.
|3 If the governor chooses to veto or modify the legislation, the General Assembly will take it up again at a reconvened session, scheduled for April 6.
|4 If the charter legislation passes, the participating universities — U.Va., Virginia Tech and the College of William & Mary — will then negotiate individual charter agreements with the state between when it passes and July 1.
|5 Once a charter agreement is approved, the earliest it could take effect is July 1, 2005, the start of the new fiscal year.
|6 In future years, the charter legislation calls for the charter agreements to be negotiated by Dec. 31 and submitted to the General Assembly. The effective date would be specified in the agreement.