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October 04, 2005

HOSPITALS: How to play nice with workers, and how not to

If you hadn't noticed, the next round of unionization will come in the big service industries. This is going to build over time, but health care services will be the biggest push because (with the obvious caveat about overseas surgeries) it's hard to move health care jobs off-shore, and it's hard to replace labor with technology in those jobs (though lots of people will be trying!). So if you're a hospital chain how do you handle the fact that the SEIU is targeting your industry? You basically have two choices. Enter into a partnership agreement with the unions and hand over a small slice of the vast profits you are making as an organization to your workers. Or tough it out, continue to make as much as you can, and let the unions eat cake.

In Northern California we have both examples. Sutter is deciding to essentially risk its non-profit status by being not only the consistently most expensive provider chain, but having a nasty fight with the SEIU at its most profitable hospital, Cal Pacific.  And of course the unions are highlighting the amount of money they're making and helping get the Department of Justice to investigate.

Kaiser Permanente on the other hand has a big deal with its unions in which everyone gets a decent pay rise (at a time when KP is making bank, one might add) and about which the unions are deliriously happy. Here's what the union rep said.

"This is the best (union) contract in the country," said Sal Rosselli, longtime president of SEIU's Oakland-based United Healthcare Workers West and its predecessor, Local 250. "It's the best contract we've ever reached with a hospital system." Praising Kaiser for including workers in every stage of planning, Rosselli called it "the opposite extreme" from Sutter Health, which runs California Pacific Medical Center in San Francisco, now in the third week of a bitter UHW strike. "Kaiser is serious about being the health-care provider of choice," he said, "and to do that it needs to be the health-care employer of choice."

Given that there is a huge connection between employee satisfaction and patient/member satisfaction, Kaiser might be on to something. Either way, at its current rosy spot in the revenue cycle, it's a little odd that Sutter is drawing such a strong line in the sand. Perhaps someone wiser than me can explain why.

October 4, 2005 in Hospitals | Permalink


Matt - wow, it was great to see my complaint about the way Sutter uses collections agencies to be apparently a widespread experience. Is there anywhere I can register my complaint and help the DOJ investigation?

Posted by: gadly | Oct 4, 2005 2:58:51 PM

Also from Daniel Weintraub

Good news, or bad?
It's good news, of course, that Kaiser Permanente health care is close to a new labor deal with its workers. And most of us would consider it good news that Kaiser's employees will be getting raises and keeping their good benefits. They'll get 13 percent raises over three years. Sacramento area workers will get an additional bump of 10 percent to 13 percent to bring their wages into line with Kaiser workers in the Bay Area.

"It's the best contract we've ever bargained with Kaiser or anyone else," Sal Rosselli, president of United Healthcare Workers/West, an affiliate of the Service Employees International Union, told the Sacramento Bee.

But down the road, when Kaiser raises the prices it charges for its care, will Rosselli and everyone else be just as pleased? Probably not. Yet the rising cost of health care, which we all love to bemoan, is made up of the cost of wages and benefits, along with new equipment, new buildings, and new drugs, all of which we also enjoy.

It's probably close to futile to try to reduce the cost of health care without also being willing to reduce the cost of the inputs that drive the overall cost higher. And few of us want to do that. We would do better to spend more of our time trying to figure out a way to get access to quality care for those who are unable to afford it now.

Posted by: Tim | Oct 4, 2005 4:19:35 PM

I'm sorry to see that you don't understand how SEIU only goal is to enrich SEIU. They are part of the reason the cost of health care is going up.

also here is a good article from the SAC Bee on health care and what the Evil Sutter and Kaiser are doing with there ill gotten gains.

Posted by: Tim | Oct 4, 2005 4:20:42 PM

//13 percent raises over three years//

Hmmm, I didn't realize this was over three years (and then pay stagnates until there's a new contract?). This seems to be in line or even below the pay-increase rate of exempt employees. Don't they tend to get around 5% as long as their performance review is above average? Sometimes there's a cap on all increases, but during normal times the bump can be as much as 10% if you're doing a fantastic job and/or your salary is below market. The increase can be even more if you're promoted to a position with a totally different pay scale. I think the unionized Kaiser workers are being ripped off here unless their base pay is already above market. :-/

Posted by: gadly | Oct 4, 2005 11:10:52 PM

//Evil Sutter and Kaiser are doing with there ill gotten gains//

I don't have a problem with investing in health care technology. I have a big problem with wasting technology dollars on stupid projects and putting big technology projects in the hands of incompetent managers. I don't know about Sutter, but Kaiser has a big problem with technology infrastructure. They're in love with the idea of political patronage and actively fear and discourage real technical ability. That's a recipe for awesomely bloated technology costs. Those costs are passed on to the consumer.

Posted by: gadly | Oct 4, 2005 11:25:28 PM

gadfly, I know you have an inside view of Kaiser and their IT infrastructure, but I have a view both as a patient and as part of the delivery system. In my opinion the way that Kaiser uses technology is so far ahead of anything else that I see, it's amazing. The access that ER docs have to imaging, labs, and history really enhances care. They may be wasting a lot of money, but some of it is trickling into useful projects. Compared to non-Kaiser hospitals in Northern California, there's no contest.

Posted by: elliottg | Oct 5, 2005 10:09:43 AM

//They may be wasting a lot of money, but some of it is trickling into useful projects.//

I think this is an accurate assessment, and I'm really not against technology that improves patient care. The waste that goes on is jaw-dropping, though, and I think this has a bigger impact on the cost of health care than people realize. When there's a mandate for belt-tightening, the belt-tightening occurs in all the wrong places: laying off technical employees, who are deemed less important than the hordes of project managers, hiring contractors that cost twice as much to replace them, and ignoring the bad process decisions that are wasting all the money.

There could be dramatic savings at Kaiser if technology development was being staffed and managed by people who were truly knowledgeable about technology instead of people who know the right people. I would also like to stress that I don't think this is so much a problem in the IT division of Kaiser as in the IT structures being set up within the physician groups. I think Kaiser would be better off it engaged in more of a partnership with the IT division and cleaned out all the buzzword-shovellers in the physician's groups.

Even if Kaiser is doing better than every other CA hospital in regard to technology in the clinic, that just means the state of Healthcare IT is pretty dire in general. Kaiser is at the top of a very low heap, and the members are over-paying for it.

Posted by: gadly | Oct 5, 2005 11:54:16 AM

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