'Breakthrough' labor deal causes stir

An agreement reached this past spring between the California Hospital Association and the SEIU-United Healthcare Workers West has been deemed a “breakthrough” in labor relations. The contract, however, has also stirred up controversy between labor and hospitals.

In lieu of signing a traditional labor agreement, the groups have come together to create a deal that includes a code of conduct to govern conversations between union representatives and hospitals. The most unusual part of the agreement includes a $100 million advocacy committee with the goal of improving healthcare delivery. The committee will focus mainly on increasing California’s Medi-Cal payments, which are one of the lowest in the country.

One pivotal part of the agreement concerns two ballot initiatives created by the SEIU-UHW, which will now be dropped. One initiative would have capped hospital pricing at no more than 25 percent above the actual cost of care. The other would have capped the salary of executives at nonprofit hospitals at $450,000 annually.

Steve Valentine, president of healthcare management consulting firm the Camden Group, said it was the threat of these initiatives, which both polled highly among individuals, that got the hospitals to talk.

“The unions did this to force the CHA to the table to get what the unions want – organizing people and getting more members,” he said. “The strategy was to get hospitals to the table to have a dialogue, because I’m not sure the SEIU wanted an all-out war, which is the path they were going down.”

He said the agreement ended up working for both parties because hospitals may not receive more Medi-Cal funding and the union has greater membership.

But not all hospitals signed onto the agreement. Cedars-Sinai negotiated its own contract with the SEIU-UHW for its employees. Another that did not sign on is Prime Healthcare Services Inc. and, not surprisingly, there is little love lost between the hospital and union.

In a conference call leaked this past spring to the Los Angeles Times, Dave Regan, president of the SEIU-UHW, lashed out at two hospital groups, along with Providence Health & Services, which also did not sign the agreement.

On the recording, which the SEIU-UHW did not dispute as false, Regan said that all hospitals should pressure the three chains to sign the agreement or the SEIU-UHW would draw public attention to the hospitals through protests.

“We're going to continue to be public and beat them up and raise all the stuff that drives you crazy or you're going to figure out how to get those guys to heel,” he said. “These guys are just not good citizens.”

In a written statement via e-mail, Edward Barrera, director of communications for Prime Healthcare, said the organization chooses to let the employees decide whether or not to be represented by unions.       

“Prime Healthcare … declined signing an agreement between the California Hospital Association and SEIU-UHW because we did not believe it to be in the best interest of our employees,” Barrera said. “The agreement … would exclude all other unions and rob employees of their right to an election.

“SEIU-UHW President Dave Regan threatened to publicly malign any organization that did not sign the agreement and thereby represented an obstacle to their growth,” Barrera continued. “For more than five years, SEIU-UHW has been waging an anti-corporate campaign against Prime Healthcare because we are protecting our employees’ rights. Since declining to sign the agreement, the union has continued its malicious campaign of misinformation that contradicts the facts of Prime Healthcare's success.”

In July, the SEIU-UHW sent a resolution to the state attorney general’s office opposing the sale of any hospital to Prime. That same month, the group also sent a series of letters to congressional leaders in the state, requesting they quit taking contributions from the hospital chain and its and Chief Executive Prem Reddy, according to an article in The Sacramento Bee.

It’s not just hospitals that are concerned about the agreement. Sal Rosselli, president of the National Union of Healthcare Workers, said the shrinking of the labor movement has forced groups like SEIU-UHW to take an unusual step like the agreement to gain membership.

He said the agreement is not transparent and that union members should be in control of contracts with employers, not union heads.

“This is inappropriate collaboration between union leaders and hospital employers,” Rosselli said. “It is terrible for workers because the SEIU pre-negotiated a long-term agreement that hospitals are comfortable with the economics of and waives the right of workers to strike and advocate for patients – which, from our point of view, is a fundamental responsibility of healthcare unions.”

And it is more than just controversy that may keep these kinds of agreements from working in other states. Valentine said that California, for a handful of reasons, is a “unique beast.”

“California is more out of whack … than the rest of country,” he said.

A handful of factors made this kind of agreement work well in the Golden State. First, Valentine said there are five health plans that control a large majority of the HMO market in the industry. Because of this, payers have enough leverage to keep hospital payments low, so many of them lose money on operations.

Another challenge for hospitals in California is the nurse-staffing ratio. California is currently the only state in the nation with ratios in place, which have driven up costs, Valentine said.

California is also a highly regulated place for providers. Hospitals in the state have to deal with issues like seismic compliance that others don’t deal with and which increase costs, Valentine said.