University of Utah Trustees Boost Hospital, Clinic Staff's Retirement Packages
Posted on: Thursday, 15 May 2008, 12:00 CDT
By Brian Maffly, The Salt Lake Tribune
May 13--University of Utah trustees gave what amounts to a 6 percent raise to hospital and clinic employees Monday when they approved a $5.8 million boost to their retirement packages.
The current employer contribution, 3 percent of employees' pay, is quite stingy by industry standards and is blamed for the system's high turnover rate, particularly among older staffers who leave to take advantage of better benefits offered by other health systems, administrators said. Trustees agreed to boost 401(a) contributions from 3 to 6 percent and match employees' 403(b) contributions up to 3 percent, depositing contributions every pay period rather than annually. They also eliminated the 1-year waiting period for enrolling in the retirement program and tinkered with the 5-year vesting schedule.
The move brings hospital staff retirement benefits more in line with what other university employees get and what other health systems offer, said David Entwistle, the system's CEO.
"Retirement benefits are a powerful recruiting tool," U. President Michael Young added.
The new deal doesn't affect all of the system's 7,500 employees, just the 4,248 full-timers hired since July 1, 2001, when the U. changed its compensation structure to enhance its ability to woo health-care employees. The idea was to sacrifice some retirement benefits in favor of higher pay. Administrators have since discovered the weak retirement package took a toll on employee retention and turnover climbed to 20 percent, far above the industry norm. High turnover translates into higher costs in training new staff.
"We're in a low unemployment economy in Utah so it makes it easier for people to move," said Gordon Crabtree, the hospital's chief financial office. "When we restructured the benefit program, we intended to align the retirement plan with what appeared to be the market."
The U.'s health system includes 11 community health centers and several specialty clinics, as well as University Hospital, with a payroll of about $300 million. The move to increase benefits comes at a time when the system is already bracing for a $25 million funding hit stemming from controversial changes in Medicaid reimbursements. But increasing employee benefits could save some money in the long run and improve patient care by enabling the U. to attract and retain strong employees, officials said.
"Building a budget is all about setting priorities and our employees are priority No. 1," Crabtree said in an interview. "It's important we retain mature and stable employees who are aware of what we stand for."
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Source: The Salt Lake Tribune
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