SEIU Teams Up with California Hospitals, Withdraws Ballot Initiatives

(Getty Images)
(Getty Images)

The California Hospital Association and Service Employees International Union say they have reached a "unique agreement" that will "change the face of healthcare in California."

And in the process, the two ballot initiatives SEIU backed -- that would have put dramatic limits on both hospital charges and CEO compensation -- are being withdrawn.

The partnership was announced Tuesday morning, is effective immediately, and runs through December 31, 2017. In a long call with reporters, both sides emphasized what they called the centerpiece of the deal: a $100 million "joint advocacy fund."

Major Goal is Raising Medi-Cal Rates

CHA president Duane Dauner said the parties "will undertake the task of making sure that we fundamentally reform California's Medi-Cal program over the coming two years." Medi-Cal is the federal-state health program for people who are low income.


Specifically, both SEIU and the CHA seek to increase Medi-Cal reimbursement rates to providers, currently 49th in the country, a move that was good news to advocates.

"We certainly support increasing Medi-Cal rates, because that improves access to care for the 8-plus million Californians in Medi-Cal right now," said Anthony Wright, executive director of Health Access. He noted that some 9 million Californians are now enrolled in Medi-Cal, in the wake of the expansion under the Affordable Care Act. "All those folks need access to primary care providers and hospitals, to get the care they need, but that means paying a decent rate to providers."

But some people are curious what the union is getting out of this move. The details of the agreement will not be made public. Instead, the deal was summarized in a one-page press release. To Glenn Melnick, a health economist at USC, the potential overhaul of Medi-Cal is not where focus should lie.

"The big news is that they're pulling those items off the ballot," he said. "That's the big news. Why? I can't tell from this release."

Melnick called the initiative that would have regulated nonprofit hospital prices "the nuclear option … it was tying hospital pricing to cost. That's a tremendously powerful threat."

But he noted that if such a measure would have passed, then hospitals would have had less revenue -- meaning they would have had less money to spend on wages and salaries of their employees.

Dave Regan, president and CEO of SEIU-United Healthcare Workers West, said that working to overhaul Medi-Cal might ensure a more stable future for workers. "What do we get out of (the deal)? We get the opportunity to built the best health care system in America. We get to do it in collaboration with hospital providers, we get to offer our younger members an opportunity to help create a future that will offer them stable employment to retirement and then hopefully a secure retirement beyond that, and frankly, we don't have that right now."

Melnick did agree that higher Medi-Cal payments would potentially give hospitals more money to spend on their workforce. "Sixty percent of budget is wages and salaries in a hospital," he said. "If they have more, they'll spend it, because they're good at that."

In addition to SEIU and the California Hospital Association, other hospitals and health systems are parties to the deal which covers a majority of hospital beds in the state.

A spokesman with the state's Department of Health Care Services said they were reviewing the agreement and declined comment.

Harsh Criticism

In a joint release, three powerful unions in California harshly criticized the agreement, calling it "an act of treason."

"This agreement will undermine the rights of workers and will eliminate the union's watchdog role on behalf of patients," read the statement from the California Nurses Association, the National Union of Healthcare Workers and the AFL-CIO. It noted that it appeared that "SEIU agreed to become a company union" and chastised SEIU for refusing to release the details of the deal.

In the joint agreement, both the CHA and SEIU say they will seek "legislation, regulations or voluntary compliance to address the issues raised in SEIU-UHW's two hospital ballot initiatives, which will not be pursued. This includes modernizing the hospital pricing system."

Wright, of Health Access, said hospital bills are often "outrageous" and might have "no relationship to what insurers or government programs pay."

"It's impossible to make apples-to-apples comparisons, it's impossible to get a handle on hospitals' pricing, the rhyme or reason of it."

The CHA's Dauner defended hospital price transparency, and insisted that "anyone that wants to see what hospitals charge for anything is immediately available on the state's website."

California recently received an "F" in health care price transparency from the nonprofit Catalyst for Payment Reform.