Hospitals and union make deal to avoid ballot measure fight

California hospitals have reached a deal with the state’s largest healthcare union to avoid an expensive and potentially nasty ballot measure fight this fall that would have cast a harsh spotlight on high medical costs and executive salaries.

As part of Tuesday’s agreement, the Service Employees International Union-United Healthcare Workers West dropped proposed ballot initiatives to limit hospital charges and cap what nonprofit hospitals pay their executives.

In return, the California Hospital Assn. and a majority of the state’s 430 hospitals approved a new “code of conduct” that may make it easier for the union to organize workers. The agreement seeks to eliminate the negative campaigning and bitter attacks between these longtime adversaries.

“If we moved forward with the initiative war it would have been a major catastrophe for both organizations,” said C. Duane Dauner, chief executive of the California Hospital Assn.

Tuesday’s agreement also calls for a $100-million fund that will be used in lobbying for increased hospital reimbursements from Medi-Cal, the state’s Medicaid program for lower-income patients. Hospitals have long complained about that government shortfall and how it forces them to shift costs for uncompensated care onto employers and workers, driving up their health insurance premiums.

The union and hospitals said they may seek a ballot measure on improved Medi-Cal funding in 2016 if lobbying state officials and lawmakers is unsuccessful. The two sides declined to specify their contributions to the $100-million fund.

In 2012, the two sides struck a similar agreement to head off another ballot measure. But that deal didn’t help Service Employees’ organizing efforts to any large degree, so tensions flared anew.

The two sides hailed the new collaboration, but critics were unimpressed.

Nelson Lichtenstein, director of the Center for the Study of Work, Labor and Democracy at UC Santa Barbara, said he doubts this latest deal will produce much meaningful change either in terms of union membership or healthcare policy.

“This doesn’t sound like a breakthrough agreement. I think at the margins they may get some more money from Medi-Cal,” he said. “SEIU has done this numerous times in the past and it tends to fall apart.”

Another rival union went even further, blasting Service Employees officials for cozying up to the hospital industry once again.

“In World War II, being labeled a collaborator was comparable to an act of treason,” Sal Rosselli, president of the National Union of Healthcare Workers, said in a statement. “This agreement will undermine the rights of workers and will eliminate the union’s watchdog role on behalf of patients.”

Dave Regan, president of the SEIU’s United Healthcare Workers West, acknowledged that criticism and said labor groups must embrace new approaches as a matter of survival.

“This is one approach that ought to be looked at as we’re trying to reinvent a union movement that is in steep, steep decline,” Regan said.

He also defended this move as a better use of millions of dollars that could be wasted on a ballot campaign. Regan said the two sides can work together on lowering healthcare costs and improving quality for all Californians.

“Rather than take $100 million and fight each other where the prospects of success are totally unclear and up in the air,” Regan said, “we will take a huge amount of resources and attack the problem together.”

Dauner of the hospital trade group said the new agreement was different from the 2012 accord because individual hospitals are signing on to the deal, giving it more weight.

“This agreement hopefully will overcome the types of deficiencies we had the first time,” he said.

The overall Service Employees organization, with nearly 2 million members nationwide, is one of the few unions to increase its ranks amid slipping union membership across the country. The SEIU-United Healthcare Workers West represents about 90,0000 hospital workers in California and 150,000 members overall.

In recent months, the union had been collecting thousands of signatures across the state and staging rallies outside hospitals featuring patients who were socked with big medical bills. The union faced a deadline early next month to get on the November ballot.

One proposed initiative would have capped the pay for nonprofit hospital executives in California at $450,000 annually, including bonuses and other incentives.

The other measure would prohibit hospitals from charging more than 25% beyond the actual cost of providing medical care. The union said that hospitals charged 320%, on average, above the cost of care.

Hospitals countered that no patients actually pay those inflated charges because private insurers negotiate deep discounts and charity care programs shield the uninsured and other low-income people from the full amount.

Hospital officials estimated that capping charges would cut $12 billion annually from hospital revenues statewide, triggering widespread cutbacks in services and staffing.

Under their new partnership, Regan said, higher Medi-Cal reimbursements could alleviate some of the financial pressure on hospitals and enable them to bargain more freely on wage increases and other employee benefits.

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