Fundamentals of Human Resource Management 5th Edition by Raymond Noe, John Hollenbeck, Barry Gerhart, Patrick Wright

Exercise 13

The SEIU Takes On the California Hospital Association
Hospitals in California recently experienced firsthand that employers may find themselves negotiating with unions even when their employees are not represented by a union. The California Hospital Association, representing the state's private hospitals, signed an agreement with the Service Employees International Union (SEIU), whose members include nurses, respiratory therapists, maintenance workers, and other hospital workers. In the agreement, titled the Partnership for a Healthy California, the hospital association promised to facilitate meetings between the SEIU and the chief executives of its hospitals and health systems. The parties also acknowledged that the agreement does not require the hospitals to sign union-organizing agreements.
In announcing the agreement, both sides described it as an effort to partner in improving health care costs and quality, as well as access to health care. Dave Regan, president of SEIU-United Healthcare Workers West, insisted that the agreement is "not a labor relations agreement" but a commitment to making "durable, lasting, meaningful change" in the health care system. Both sides described the agreement as "groundbreaking."
However, the events leading up to the agreement suggest that it was about more than a shared desire to improve the health care system. During the months before the agreement was reached, the SEIU had been gathering signatures to have a measure placed before the state's voters. That measure would have forbidden private hospitals from setting fees at more than 25% above the cost to provide care, and it would have required nonprofit hospitals to spend at least 5% of patient revenue on free health care services for the poor. (Government-run hospitals were excluded because most of their patients are poor.) The SEIU promoted the measure as a way to make health care more widely available to poor people while reining in excessive charges. State law requires nonprofit hospitals to provide charity care, but does not specify an amount or type of care that must be provided.
Coincidentally or not, the measure was written with wording that exempts two health care chains where the employees are SEIU members: Dignity Health (the largest hospital chain in California) and Kaiser Permanente (the largest HMO in California). The SEIU represents about 60,000 employees at those two organizations. In contrast, it applies mainly to organizations where the SEIU does not represent the workers. Critics complained that the charitable-sounding ballot measure was a way to give a competitive advantage to companies where employees were organized by the union. They noted that the collection of signatures was launched at Sacramento's Sutter General Hospital, where the SEIU had long been trying to organize workers. The SEIU's Regan responded that the initiative was a broad one that would address practices at three-quarters of the state's hospitals, that Dignity already provides a substantial amount of charity care, and that Kaiser has its own insurance company and reports different financial data to the state.
When the signature-gathering campaign began outside Sutter, SEIU workers were spreading the message that the hospital, on average, overcharged patients by more than 400%, even though it had $3.2 billion in reserves. At that point in the campaign, Sutter's spokesperson merely pointed out that the numbers were wrong and that although the current business model for healthcare "is not sustainable," the ballot initiative was not the way to solve the problem. Whether or not he continued to feel that way, a few months later, the hospital association had agreed to be a problem-solving partner with the SEIU.
Do you think the SEIU can (or will) help California hospitals reduce costs and increase quality and access to care? Why or why not? What would be the most advantageous relationship for a California hospital to have with the union?