Kaiser Strike Ends Sunday as Union and Management Plan to Resume Wage Talks

As tens of thousands of Kaiser Permanente health care employees approach the end of a five-day, multi-state walkout on Sunday, both sides said they’ll return to the bargaining table over the central dispute: how much of the union’s pay-hike demands the nonprofit’s executives will agree to.

The stakes are high for Kaiser, the largest private employer in the state. The national contract, months in negotiation with the Alliance of Healthcare Unions, covers nearly 61,000 nurses, physician assistants, pharmacists and other frontline workers — about a third of Kaiser’s workforce — though roughly a quarter of those represented declined to go on strike.

Experts say the organization must tread carefully in talks amid rising costs and economic headwinds.

“We remain committed to reaching an agreement, if possible, that provides strong wage increases that are sustainable while balancing our obligation to deliver high-quality care that remains affordable,” Kaiser said in a statement.

The two sides appear close on paper. The Alliance seeks a 25% wage boost over four years for employees, it said are underpaid. Kaiser, which maintains that workers already earn above-market wages, has drawn the line at 21.5%. The difference, which adds up to roughly $300 million a year in salary costs, is what Kaiser said could force it to raise rates among its 12.6 million members, most of them in California.

“It’s the traditional labor-management battle,” said Dr. Robert Pearl, a former top executive at Kaiser who now teaches at Stanford University’s medicine and business schools. “My own view is that’s not the best thing for patients, this strike … It’s a sign of failure to not be able to work together for the good of all.”

Since Tuesday, Kaiser has hired thousands of temporary nurses, clinicians and other staff to minimize disruptions in California, Hawaii and Oregon. In Northern California, only 3% of all appointments, surgeries and procedures were rescheduled, according to Kaiser. Medical centers, offices and pharmacies remain open.

The walkout caused more disruptions in Southern California, temporarily closing pharmacies in Riverside and Ventura Canyon, as well as laboratories and target clinics in San Bernardino and Riverside. The union said dozens of pharmacies were shuttered in Los Angeles, Orange, Kern and other counties. Ambulances were diverted from Kaiser to nearby hospitals in Irvine and San Diego, according to picketers.

Temporary nurses and other professionals brought in from across the country posted on social media about being stranded in buses and hotels for many hours. Their staffing company, AMN Healthcare, later apologized over “logistical and communication breakdowns over the last few days [that] created regrettable delays, stress, and confusion for the AMN teams supporting the Kaiser Permanente strike in SoCal,” according to a letter shared with KQED.

The company did not respond to requests for comment but offered a $1,200 bonus for those who covered out-of-pocket travel or lodging expenses.

Union representatives maintain that Kaiser, which has expanded to other states in recent years, can meet their demands given its profits and an estimated $66 billion in reserves. Workers say colleagues are leaving for better pay and lighter workloads, straining those who remain.

“They’re sitting on a lot of money. And that money seems to be not meant for their staff that are currently out here today,” said Jeff Cathcart, a nurse anesthetist at Kaiser San Francisco who is in the union’s bargaining team and joined the picket line outside the Oakland Medical Center. “This pay increase is pretty vital.”

Union leaders say many workers accepted smaller raises during the pandemic and need to catch up with inflation and the high cost of living. Their latest proposal would boost wages by 9% in the first year, 5% in the second, 7% in the third and 4% in the fourth.

“Kaiser Permanente can absolutely not only afford it based off of the money they have in the bank and the revenues they have coming in — I would say that Kaiser Permanente cannot afford not to do it,” said Jane Carter, research director for the United Nurses Associations of California/Union of Health Care Professionals, the largest of 23 unions in the Alliance.

“If they want to continue to be the standard bearer and the gold standard of care delivery in this country, then they have to make sure that they pay to get the healthcare professionals that can properly do the care,” she said.

Kaiser’s top Medicare rating fell from five stars in 2023 to 4.5 last year, which the union blames on staffing shortages. The drop matters because five-star plans receive higher government payments and can enroll members for longer each year.

Kaiser Permanente was founded in California in 1945. As a nonprofit, Kaiser said it reinvests most of its insurance income into its hospital and clinic operations, instead of generating returns for shareholders as for-profit companies aim to do. Its 3% operating income margin — about $2 billion in the first half of this year — is lower than that of other major health systems.

That makes its warning that higher wages could lead to higher consumer costs plausible, said Joanne Spetz, a health economist and labor expert at UCSF.

“They don’t have as much wiggle room as one might think when you look at how large their operating revenue and expenses are,” said Spetz, noting Kaiser’s 2024 operating revenue of $115.8 billion and expenses of $115.2 billion, a 0.5% income margin.

Kaiser claims that its $66 billion in reserves are earmarked for employee pensions, building maintenance and other obligations and financial stability. Organizations of its size — with 180,000 employees across eight states and Washington, D.C., should have a financial cushion to weather unexpected challenges, according to Pearl.

“Let’s say the markets will go into a recession for the next five years. You can’t build the hospitals you need. You can’t buy the machines that you need. So you want to make sure you have reserves,” Pearl said. “If I were the CEO of the whole organization, I would basically say my job is to make sure I never have to compromise care and never tell a worker I can’t pay you.”

Kaiser said any wage hikes for Alliance members must come from the operating income, not investments. The union disputes that, accusing Kaiser of hoarding cash while expanding. Kaiser acquired hospital systems in Pennsylvania and North Carolina in recent years and announced an expansion to Nevada next year.

Traditionally seen as a West Coast institution, Kaiser is now seeking national influence against competitors such as Amazon, CVS and Walmart, which are spending billions to buy health care companies, according to Pearl.

“If you don’t have a national presence, it’s hard to convince legislators to pass laws that are gonna be better for the members of Kaiser Permanente,” he said. “I don’t mean the providers, I mean the patients of Kaiser Permanente.”

The negotiations come as the Trump administration moves to restrict Medicare eligibility and Congress debates whether to renew subsidies central to the current government funding fight. Without them, health insurance prices are expected to rise for lower- and middle-income families. Kaiser could face reduced earnings as consumers drop coverage, Spetz said.

“They might also be concerned that they’re going to have some increased costs that could come from emergency care,” she said. “I suspect that losing revenue because of people dropping health insurance is the much bigger risk for them.”