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Why Is Kaiser Permanente Engaging in Corporate Kabuki?

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GUEST COMMENTARY - What happens when corporate values intersect with health care and labor organizing? Members and stakeholders of Kaiser Permanente (KP), one of the nation’s largest nonprofit health care providers, are about to find out. A majority of KP’s unionized workers just voted to authorize a strike, and if KP fails to come to an agreement with the Coalition of Kaiser Permanente Unions (CKPU), we could sese the nation’s largest strike by health workers in United States history—one that could impact more than 12 million patients.

On the surface, this development appears to be part of a recent national wave of labor battles. However, the reality is more complex, as the dynamics between KP and its unionized workforce are somewhat unique.

KP is a nonprofit entity, which means that, in theory, there should be no pressure from shareholders to minimize expenses in order to maximize profits, and there ought to be an efficient relationship between the cost of patient premiums and the cost of health care. KP has offered a tantalizing example of the economic feasibility of how a government-run system might function where preventative, integrated health care is the number one priority.

Additionally, because of KP’s unique nonprofit nature, there has been a relatively friendly relationship between KP and the CKPU since 1997 when the two entities signed a labor agreement involving employees in decision-making. That agreement, which was renewed in 2019 as part of a union contract, expires on September 30, 2023 with the contract.

But just weeks before the deadline, both sides have remained far apart. And, as union members ready themselves for a strike, the KP employer-union dynamic now resembles a more traditional adversarial relationship in keeping with the current state of the U.S. labor movement where union militancy is on the rise.

Why is that? In a nutshell: it appears that the closer a health care institution cleaves to corporate values, the worse off patients and health workers are. And, while KP has in the past tended to straddle the middle-ground between government-style health care and corporate-profit-driven health care, it now seems to be leaning closer to its corporate cousins.

The CKPU—which is an umbrella organization comprising a dozen union locals representing 85,000 members—at one time celebrated “how cooperation instead of antagonism [between KP and its workers] can lead both to better patient care outcomes and to making KP a better place to work.” But in August 2023, CKPU declared, “Kaiser’s Values Are Not Our Values.”

While I’ve been a longtime proponent of a Medicare for All, fully funded government health care system, I can count myself among the roughly half of the nation’s population privileged enough to have employer-subsidized health insurance coverage. As a member of KP for more than a decade, I’ve generally been content with its ability to deliver full-service, streamlined health care with an emphasis on prevention, where patients rarely have to fuss over paperwork, reimbursements, or approval for referrals, and can efficiently manage their care electronically.

But I’ve often noticed how harried KP nurses, receptionists, X-ray technicians, and other medical staff appear to be. They are overworked and stressed and while they fake it beautifully, they are subject to the same nationwide pressures of health worker shortages as those working in other health institutions. Those shortages ultimately impact patients (many of whom are KP employees as well).

There’s no mystery about why KP workers are so stressed. In the space between the signing of the 2019 agreement and its imminent expiration in the fall of 2023, there was a devastating global pandemic that stretched the limits of institutional ability to deliver care all over the nation. The U.S. Surgeon General Vivek Murthy has made it a priority to address health worker burnout, stating that “even before the COVID-19 pandemic, health workers faced major challenges.” The pandemic then exacerbated that, leading to extraordinarily high levels of depression and stress among workers.

It’s no wonder that in 2020 and 2021 an estimated 20 percent of health workers left their jobs, including 30 percent of nurses. The health worker shortage has fueled even greater stress among those who remain in their jobs. The CKPU in an open letter explained how “[m]any of our co-workers have left and more are considering leaving,” and has demanded that KP hire 10,000 new union positions. Undoubtedly this would benefit patients, ostensibly the highest priority for a nonprofit health care corporation.

KP countered with a proposal affirming that it has hired 8,700 workers, but at a lower minimum wage of $21 an hour than CKPU’s demand for a $25-an-hour wage floor. KP also says it is offering significant pay raises that are “well above market rate in some areas.” As so many for-profit corporations have done, the company is trying to divide workers into tiers, offering smaller raises to some workers than others, contending that “it’s important that we address these differences on a market-by-market basis.”

The CKPU, flexing its clout as an umbrella union, is standing firm and has rejected the offer, calling it “offensive.”

To preserve labor power, large employers require equally large unions. A case in point is how the Teamsters, one of the nation’s largest unions, were able to leverage their size against UPS, a behemoth employer, and stave off a strike, winning a good contract in August 2023. Meanwhile, Hollywood’s rank-and-file writers and actors have been on strike for months, working in an industry where the bosses are united in their refusal to pay fair compensation while unions are splintered.

Responding to KP’s proposal, CKPU rightly stated that, “If we let them get away with attacking some members with lower raises now, we will never know who might be on the chopping block next time.” The unions’ demands are hardly unreasonable given that KP has been more than financially solvent. The nonprofit made $2.1 billion in “profits” in the second quarter of 2023 alone.

KP’s slide toward corporate culture began several years ago. Even before the pandemic, the Service Employees International Union-United Healthcare Workers West (SEIU-UHW), which is part of CKPU, accused KP of behaving like a for-profit corporation when it refused to sign a pledge in 2019 to shift focus from shareholders to all stakeholders. Some years earlier, in 2016, the same union pointed out that KP’s board members had gathered at a luxury hotel to reward executives with large bonuses on top of their seven-figure salaries while refusing performance-based bonuses for many of its workers.

Now, just as for-profit corporations bring on scab labor to undermine unions, KP is reportedly preparing to pay contractors to step in in case workers strike—rather than just paying union workers what they’re asking for.

CKPU has matched KP’s corporate kabuki with combative zeal, winning an extension of pandemic-era bonuses and benefits in 2021, for example. The unions appear ready to bring that same energy and militancy to the coming battle over renewing its agreement with KP.

The question is, will KP risk the largest health worker strike in U.S. history in order to preserve the sort of corporate values that have plagued for-profit health insurance companies? Or will it prioritize workers’ rights, and by extension, patient care?

 

(Sonali Kolhatkar is an award-winning multimedia journalist. She is the founder, host, and executive producer of Rising Up With Sonali, a weekly television and radio show that airs on Free Speech TV and Pacifica stations. Her most recent book is Rising Up: The Power of Narrative in Pursuing Racial Justice (City Lights Books, 2023). She is a writing fellow for the Economy for All project at the Independent Media Institute and the racial justice and civil liberties editor at Yes! Magazine. She serves as the co-director of the nonprofit solidarity organization the Afghan Women’s Mission and is a co-author of Bleeding Afghanistan. She also sits on the board of directors of Justice Action Center, an immigrant rights organization. This article was produced by Economy for All, a project of the Independent Media Institute.)