Hospital makes good on paycheck promise

April 8, 2010 4:29:31 PM PDT
Swedish Covenant Hospital is making good on a paycheck promise to its workers. It asked workers to take a pay freeze last year and promised to repay the salaries if employees helped the hospital turn a profit.

Fourteen months ago, workers at Swedish Covenant Hospital were faced with a tough choice: forego raises or see some of their co-workers let go. They took one for the team. Now, the hospital has returned to profitability, so the CEO is returning employees' money.

"I heard, and my heart is in atrial fib right now," said Ruby Nalzaro, Swedish Covenant Hospital nurse.

In "nurse speak" that means "I'm shocked." And she's not alone. There was some skepticism last year when management at Chicago's Swedish Covenant Hospital froze wages with the promise that if employees helped the hospital return to profitability they'd get their money back.

"Initially we were not happy with it, but then we just kind of got used to the idea and did the best we could," said Maria Comia, Swedish Covenant Hospital nurse.

Everyone pitched in. Surgical nurses helped save $25,000 by cutting back on overtime. The pharmacy saved $60,000 by more efficiently managing antibiotics. Employees voted down an annual recognition cruise on Lake Michigan to save cash.

And in the kitchen they saved $15,000 by renegotiating the price they pay for milk. Cooks even got into the act, tweaking recipes to reduce waste.

"We tried to streamline product where we use them in creative ways in many different recipes," said Paul Nicolopoulous, Swedish Covenant food services supervisor.

Hospital CEO Mark Newton is now writing each employee a check, reimbursing them for the raises they gave up last year. The average nurse will receive just under $2,000.

It is a management-employee partnership that's truly paying dividends.

"I knew it would work here. I'm not sure it would work elsewhere. It takes a unique combination of factors," said Newton. "A lot of trust."

"I'm not surprised. I think it's inherent in everyone to give a little bit of themselves," said Comia.

Experts say this type of workplace partnership is rare. A survey found just 4 percent of employers who cut pay during the recession said they would provide lump-sum payments to make their employees whole.

The reimbursement is costing Swedish Covenant about one-third of this year's operating profit.