Ostrowsky explains why RWJBarnabas is latest — and largest — N.J. health system to plan minimum wage hike

By Anjalee Khemlani
West Orange | Dec 6, 2018 at 3:47 pm

RWJBarnabas Health is joining five other New Jersey health systems in announcing its intent to implement a $15 minimum wage in 2019.

RWJBH CEO Barry Ostrowsky told ROI-NJ that his organization has been studying the possibility in the past few months, and, although Assembly Speaker Craig Coughlin’s bill that would raise the minimum wage statewide was introduced Thursday, the health system will still pursue raising its minimum wage for next year.

“If it exceeds the demands of adopted legislation, so be it,” Ostrowsky said.

RWJBH is the largest New Jersey-based health system to announce pursuing a $15 minimum wage, which would cover its 34,000 employees in the state next year.

Cooper University Health Care lead the charge last month, followed by announcements from St. Joseph’s Health, Inspira Health Network, Virtua Health and Philadelphia-based Jefferson Health, which merged with three South Jersey hospitals last year.

“We’ve been studying this for a few months,” Ostrowsky said. “We are only able to pay a certain amount because of the complexity of reimbursement. “

But, if a systemwide $15 minimum wage is implemented, it would both positively and negatively affect employees, he said.

While they would be pulled further away from the poverty line, there would be those who still struggle to make ends meet.

“As you know, there are unintended consequences, unfortunately, when you raise wages,” Ostrowsky said. “Some people who are benefitting from their membership in public assistance programs, they no longer qualify to be in those programs. So, counterintuitively and ironically, you may pay more, but it turns out, in terms of usable funds and the ability to support lifestyles, some employees may be worse off because of that.”

He intends to figure out how to support those employees and protect them from the negative impact, based on similar programs elsewhere in the country.

And, to the extent that legislation can be crafted to address the problem, Ostrowsky said he will pursue that avenue.

How this would affect the overall operations of one of the two largest health systems in the state is still unclear.

But Ostrowsky said personnel cuts are not part of the plan.

“When it comes to cutting, it’s not going to cost jobs, of course,” he said. “I don’t want to increase the hourly wage and have other people terminated. So, it won’t come from there. The extent to which we may not be able to make certain investments, be they capital or otherwise, or would have to defer, potentially, programmatic expansion, I think we’d look at it there first. But if it’s going to have a negative impact on our operational margin, then it’ll have to just be that.

“I don’t want to try and fix one problem and create another.”

Amid the health systems’ push to adopt a $15 minimum wage in the state, home health aides are still left out. Their employers are often reimbursed by government payors — through Medicare and Medicaid — which means they get paid below cost.

This results in wages that average $11 per hour.

“Some of that sector still suffers deeply from reimbursement, so they may find it difficult,” Ostrowsky said. “But my guess is the health care community as a whole might like to do whatever it can to support the employees who care for our patients.”

A legislative source, requesting anonymity because they were not authorized to speak about the bill sponsored by Coughlin (D-Woodbridge) publicly, said that consideration has been built into the bill.

The increase necessary to get home health aides and health care workers who care for the elderly to a $15 wage will be built into Medicaid increases in the budget, according to the source.

And, regarding Ostrowsky’s concerns of those who will fall off the cliff of public assistance but will still not be able to make ends meet, the source said that has also been considered.

“We’re cognizant that that is likely to happen,” the source said.

Which is why the bill also includes an annual review of the implementation and the effect it has on the minimum wage-earning population.

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Anjalee Khemlani | akhemlani@roi-nj.com | AnjKhem