After months of negotiations, one strike and the threat of another, and intervention from the governor, Johns Hopkins Hospital and 2,000 service workers reached a tentative labor agreement early Tuesday that some said could become an "important benchmark" for the health care industry.
The deal, which is to be submitted to the workers for a vote, came after seven hours of negotiations that ended at 2 a.m. It would affect housekeepers, cooks, janitors, surgical technicians and others.
Officials with 1199 SEIU United Healthcare Workers East said the agreement was prompted by an offer of raises for workers with at least 15 years of experience. The 41/2-year contract would set a minimum wage for workers with 20 years of experience at $15, and would put 15-year veterans above that mark by 2017.
Given the size and influence of Hopkins, economists and labor relations specialists said, the agreement will be scrutinized by hospital executives across the region and country. It comes as health care providers try to improve health outcomes while reducing costs, and as Maryland hospitals adjust to a new reimbursement model that caps their revenue rather than paying them per patient.
Whether increased labor costs could lead to layoffs at Hopkins, as officials warned during more than four months of negotiations, could depend on other factors, observers said.
Hopkins officials said they were pleased to move forward, but declined to comment further on the deal until it is ratified. Voting is set for Thursday and Friday.
Union officials and observers said the deal shows that a three-day strike in April — and the threat of another last month — had an impact. Gov. Martin O'Malley intervened two weeks ago to push the sides toward resolution.
"Labor is not strong like it was in the 1950s and 1960s," said Chris Tilly, director of the UCLA Institute for Research on Labor and Employment. "But it's not as much on the ropes as it was in 2009, 2010, the depths of the recession."
Raises have been a key issue for union members. In demonstrations outside Hopkins in April, they bellowed "Hey, hey; ho, ho. Poverty wage got to go." Workers said many juggle second jobs, live paycheck to paycheck and can't afford to pay for health insurance for their children.
Under the deal reached Tuesday, some union members would get raises as high as 38 percent, or $4.30 per hour, over the life of the contract. Current employees would make at least $13 per hour by 2018.
All employees would get raises of at least 2 percent every year, with a 2 percent raise and a 0.5 percent bonus in the first year of the contract, and a 2.75 percent raise in 2017.
The contract would also establish a committee to review prevailing wages for surgical technicians, pharmacy technicians and other workers, which the union contends are below market.
The service workers currently start at $10.71 to $27.88 per hour, depending on their jobs. The union initially proposed that all Hopkins workers earn at least $14 per hour by the end of the contract.
Union spokesman Jim McNeill said a "consequential move" in the negotiations came when hospital officials agreed to give employees with at least 15 years of service a minimum wage of $14.50 per hour starting in 2015, which, with the across-the-board raises, would put them above the $15 mark by 2017.
Members went on strike in April after rejecting a contract that would have provided for annual raises no higher than 2 percent and a minimum wage of $12.25 an hour by the end of the contract.
Hopkins spokeswoman Kim Hoppe said in an email that hospital officials "are glad we have arrived at a resolution that works for all parties and look forward to continuing our focus on providing world-class patient care."
O'Malley congratulated both sides.
"This is a positive resolution for Hopkins and its workers — and it's also good for all Marylanders, because when workers earn more money, businesses have more customers and our economy grows."
Tilly, of UCLA, said the union's willingness to strike probably helped it in the negotiations.
"In this case, Johns Hopkins has a reputation to defend, and it doesn't want to look like a villain," he said.
When talks deadlocked in June, the union gave notice that it planned to strike again. But the action was averted after O'Malley called for a one-week cooling-off period.
Carietta Hiers, an SEIU organizer based at Hopkins, said union members may use this contract as model in future negotiations at other institutions in the region. The chapter represents workers at the University of Maryland Medical Center-Midtown, Greater Baltimore Medical Center and Sinai Hospital, she said.
"No longer can they say, Hopkins doesn't pay it; why should we?" Hiers said. "Everyone looks up to Hopkins."
Peer hospitals across the country will also pay attention, Tilly said.
"Baltimore is not the highest-wage city around, and so the fact that there's a pretty significant settlement happening there is an important benchmark," Tilly said.
Whether it has financial consequences at Hopkins could depend on other factors, observers said. Federal Medicare officials have approved a new hospital payment model in Maryland that guarantees revenue levels tied to the state's population, rather than paying institutions based on the number of patients they see.
That could mean suggestions of layoffs aren't "an idle threat", but rather a question of finite resources, said Anirban Basu, an economist with the Sage Policy Group in Baltimore.
Ronald R. Peterson, president of Johns Hopkins Hospital and Health System, wrote in a letter published by The Baltimore Sun in April that hospital leaders "are striving to balance several different financial priorities within a finite pool of funds, to continue the kind of care people expect from us and to offer competitive compensation to all our employees to preserve job security."
Bill Barry, retired director of labor studies at the Community College of Baltimore County-Dundalk, said he didn't think the hospital would sign a contract that would force it to let workers go.
"If there are layoffs, it's due to other factors," he said.
Union members are scheduled to vote from 6 a.m. to 7 p.m. Thursday and from 6 a.m. to at least 4 p.m. Friday, McNeill said.
Tilly said a vote against the contract would be "a pretty difficult position to take," given that the agreement already came after one strike and the threat of another.
One worker who sat on a 28-person union bargaining committee said she expects the proposal to be received well.
"When we first started out, I didn't think that what we achieved was actually obtainable," said Michelle Horton, a food service worker at the hospital for the past nine years. "They have said 'No' so many times. In the end, we both saw things eye to eye and were able to reach a fair agreement for everyone."
Baltimore Sun reporters Colin Campbell and Carrie Wells contributed to this report.
Highlights of the deal
•Sets immediate $15 per hour minimum wage for workers with 20 years' experience and $14.50 minimum wage starting in 2015 for workers with at least 15 years' experience
•Gives raises of up to 38 percent, or $4.30 per hour, over 41/2-year contract term
•Covers 2,000 service workers at Johns Hopkins Hospital, including janitors, housekeepers, cooks, and technicians
•Vote scheduled for Thursday and Friday