May 11, 2021 Sent Electronically

Sen. Eric Pratt Rep. Mohamud Noor Sen. Jason Rarick Rep. Rob Ecklund Sen. Rich Draheim Rep. Liz Olson Sen. Karin Housley Rep. Rod Hamilton Sen. Kent Eken Rep. Kaela Berg

Dear Chair Pratt, Chair Noor and members of the Jobs/Labor Conference Committee:

Thank you taking public testimony last week and allowing the Minnesota Hospital Association an opportunity to share our opposition to Article 12 in the House bill mandating paid emergency leave for essential workers. Hospitals and health systems in MN have taken significant steps since the beginning of the pandemic to support their front line caregivers and health care heroes and this unfunded mandate will impose significant hardships for the vast majority of Minnesota hospitals and health systems.

So, why is this provision so bad for hospitals and health systems?

1) The number of essential workers that hospitals and health systems employ is a very high percentage of our workforce given the nature of services we provide.

2) This 160-hours of paid leave is a costly benefit above what hospitals have already provided for their employees. Based on statewide hospital payroll amounts, and the $511 per day cap in the bill, this would cost hospitals up to $740 million if you assume all eligible employees were to claim this benefit. Even if only 50% of employees use the benefit, that is still $370 million.

3) The federal government provided funding to pay for a similar paid leave benefit, but ONLY for those employers who were impacted by the March 18, 2020 federal Families First Coronavirus Response Act, employers who were either government entities, or employers with less than 500 employees. Unfortunately, the House’s bill language is on all employers with essential workers.

Most Minnesota hospitals will NOT qualify for the federal funding. Many of Minnesota’s small hospitals are part of a larger health system, so they will not qualify for the federal financial assistance. Other hospitals with less than 500 employees also own and operate a nursing home, home care or an ambulance service. All of these combined employees would exceed this 500-employee threshold and disqualify them.

4) Hospitals and health systems have extremely fragile financials at this time. Our 2019 audited financial reports found the median operating margin to be 1.4%, with 41 percent of Minnesota’s hospitals and health systems having a negative operating margin and that was pre-pandemic. This mandate is simply unaffordable for hospitals and health systems.

If the legislature wants to recognize health care workers for their hard work and contributions during this pandemic, MHA would support a bonus or premium pay for health care workers, paid for with federal money. As of yesterday, we have learned from Treasury’s Interim Final Rule that this an allowable use of dollars coming to Minnesota from the federal American Rescue Plan. Specifically, this federal funding may be used to provide premium pay directly, or through grants to private employers, to a broad range of essential workers who must be physically present at their jobs including, among others: staff at nursing homes, hospitals, and home-care settings. MHA would urge lawmakers to dedicate a sizable amount of the federal resources to provide this one- time premium or bonus pay AND not pass the mandated paid leave for essential workers, which is simply unaffordable for Minnesota hospitals and health systems.

Sincerely,

Mary Krinkie Danny Ackert Vice President of Government Relations Director of State Government Relations [email protected] [email protected] (612) 963-6335 (616) 901-7500