Pension Pressures Could Worsen Nurse Shortage

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Mercedes Herman, a registered nurse with nearly four decades of experience, can retire in 2010 but was planning to keep working for several more years at St. Luke’s-Roosevelt Hospital in Manhattan. But possible recession-driven changes to her employer-funded pension plan have her rethinking her future.

The potential retirement of Herman and hundreds like her, spurred by a desire to protect a higher pension payout, could diminish the ranks of an already overstretched workforce. The possible exodus is an effect of the federal Pension Protection Act of 2006, which could lead to drastic cuts to the New York State Nurses Association (NYSNA) pension plan. This has presented some of the union’s registered nurses with a tough choice: retire now, or risk losing up to half their pension funds. Herman is a member of the union, which claims 18,000 members in New York City, Long Island and Westchester of the state’s 250,000 registered nurses.

“I’m one of many nurses in New York that might be contemplating leaving early and taking that vast amount of knowledge I have,” said Herman, 58.

Union officials worry that up to 2,800 nurses who can retire over the next two years will leave immediately to collect their full benefits, worsening the city’s already dire nursing shortage. According to the federal Health Resources and Services Administration, the country could be short 1 million nurses in little more than a decade. That number could hit 31,000 in New York City by 2020, according to SUNY Albany’s Center for Health Workforce Studies.

The city recently responded to the shortage with a new program to place working nurses in guest faculty positions across CUNY nursing schools. The faculty increase would allow CUNY to admit more nursing students, adding 500 nurses in five years, according to City Council projections.

But with the risk of losing so many nurses so suddenly due to the pension issue, nursing experts are still worried.

“You almost have a tsunami-type of effect,” said E. Michele Richardson, nursing division director at the Health Resources and Services Administration. Richardson said a decrease in the number of working nurses would mean less access to primary health care, less room for patients in the city’s hospitals, and added strain on the nurses who remain in the field.

“If they can’t take care of patients because they don’t have enough nurses, they can actually close units to fit that nursing scale,” Richardson said. “You can literally cripple the health care system by not having enough practitioners.”

The state nursing vacancy rate was nearly nine percent in 2007, according to the Healthcare Association of New York State.

A federal law passed in December as a response to the sweeping decline in pension plans’ value, the Worker, Retiree and Employer Recovery Act, gives the union’s board of trustees – which is made up of nurse representatives and employer representatives – the option to defer for one year the alternative plans required by the Pension Protection Act. (Passed well before the economic crisis, it requires underfunded pension plans to craft plans for recovery, including reducing “adjustable benefits” by the greatest legal amount.) But the board only has until the end of the month to decide. Nurses rallied on March 5 outside the union’s Wall Street office to urge the trustees to take the extension, and will again this week. Many other plans covered by the Pension Protection Act have adopted the extension, according to NYSNA.

Bruce McIver, president of the League of Voluntary Hospitals and Homes of New York, said NYSNA’s campaign to extend the deadline doesn’t address the fundamental problem of the ailing stock market’s toll on the plan’s funds. “All it does is delay the time in which you have to make a decision to address those problems,” McIver said.

The NYSNA pension plan is a defined-benefits plan, which only employers pay into. The plan, which has 70 percent of its assets invested in stocks, lost more than a third of its value last year because of the recession. Since the recession began, many pension plans that have investments in the stock market have found themselves underfunded.

While NYSNA officials hope to get the one-year extension, they know it may not be enough time for the pension to recover.

“We know that, ultimately, these discussions will need to continue,” said Barbara Conklin, senior associate director of the union’s Economic and General Welfare Program. “But it’ll give us a year. It would allow time for additional planning.”

Meanwhile, Herman, who is single and has no children, still has a mortgage to pay on her house in New Jersey. She was planning to continue working, but if it makes more financial sense to quit, she just wants to know she’ll be comfortable enough after years on the job.

“I’m not looking to fly around the world,” Herman said. “I’m looking to be able to eat well, live well and not worry about things.”

– Jeanmarie Evelly and Marcella Veneziale

Opportunities to enhance the health care workforce are discussed in these reports by the Center for an Urban Future, City Limits’ sister think tank: Working Toward A Workforce System, March 2009, and Chance of A Lifetime, May 2006.

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