Cost implications of hospital unionization: A behavioral analysis

The growth of unionization among hospital workers was sharply accelerated by the 1974 amendments to the National Labor Relations Act covering voluntary hospital workers. With continuing inflationary pressures in the hospital sector, the cost implications of the recent and projected growth of hospital unions is of some concern to policymakers. This article presents estimates of union cost impacts based on data from hospitals in Maryland, Massachusetts, New York, and Pennsylvania. Cross-sectional regressions with data for 1975 yield positive union impacts of 3.3 percent on total costs, 4.1-5.9 percent on cost per case, and 6.1 percent on cost per day. Reestimation of the model with data on changes over the 1971-1975 period yields similar results. We also find that the cost impact of unionization varies with the pattern of coverage (being lower for service employees and RNs) and with the extent of cost-based reimbursement. This suggests that future cost impacts of union growth may be moderated as prospective payment systems for hospitals become more widespread.