Unionization and the cost of producing hospital services

Abstract

Since the inclusion of nonprofit hospitals under the provisions of the NLRA in 1974, the extent of unionization among hospital workers has increased sharply. The implications of this trend for hospital costs are examined here by analyzing data from 617 short-term hospitals in the Northeast. It is estimated that unionization on average increases production costs by 5 to 9 percent, with the bulk of this increase resulting from factors other than wage increases. Cost impacts are also found to be greater for national unions and where cost-based payment is more prevalent, and smaller for RN’s and service employees.