Labor clash may signal future showdowns.

Kaiser dispute may be watershed event, experts say

L.A. COUNTY - On its face, the clash between Kaiser Permanente and the Service Employees International Union seems like a typical labor dispute.

SEIU - which represents 25,000 Kaiser employees statewide and 10,000 in Southern California - claims its cares about the future. That's why in recent weeks it has petitioned the state Department of Corporations to hold heatings on Kaiser's plan for a large-scale restructuring, held informational pickets and disseminated literature critical of the state's largest and one of its oldest health maintenance organizations.

"We're concerned about the impact those restructuring proposals will have both on health care workers and, in the long term, the care they have to deliver," said Lisa Hubbard, an SEIU spokeswoman based in Oakland.

The petition, turned in to the DOC on May 1, quickly turned out to be a bust.

"We cannot compel Kaiser to hold public hearings," said DOC spokesman Damlan Jones. "But what the DOC ... is mandated to do is to review any proposed material modifications to their structure, and approve or deny them when appropriate."

Kaiser, which has encountered rising costs in recent years associated with operating its own hospitals, announced last February that it would begin for the first time in its history to farm out patients to outside facilities. While it has yet to announce concrete plans, observers believe widespread closures of its inpatient facilities are inevitable.

Changing times

"The winds of change are causing this, but Kaiser has no other choice in this matter if they want to continue operating in a competitive manner," said Ron Spoltore, senior vice president of Healthcare Financial Advisors. a Rancho Mirage-based consulting firm.

Meanwhile. Kaiser has been fighting SEIU tooth and nail. It launched its own flurry of missives against the union's campaign, labeling it "grandstanding" and "blatantly maccurate," and claimed the SEIU cares only about its own pocketbook.

"They're trying to turn a conflict over wages and benefits into a restructuring issue, because pay is sort of a loser issue for them," said Michael McCabe, an assistant human resources manager for Kaiser's Pasadena-based Southern California region.

The SEIU rejected last month a contract offer from Kaiser Southern California that included a 2.5 percent pay cut. McCabe said unionized employees' wages are significantly higher than those of other hospital workers - in some cases as much as 40 percent above the average rate. Altogether, wages account for 70 percent of Kaiser's total costs, according to McCabe.

The contract offer was final, he said, but SEIU has not issued a 10-day notice of an intent to strike.

"We don't think there will be a strike. They don't want to do damage to their standard of living," McCabe said.

Spoltore, Steve Valentine, president of the Camden Group, an El Segundo-based consulting firm, and Wanda Jones, president of the New Century Healthcare Institute in San Francisco, agreed that Kaiser's unionized workers are paid more than equivalent non-unionized employees at other hospitals.

Hubbard conceded Kaiser employees "make a good living," but reiterated that was not the issue.

"I guess it would be convenient that this was all a smokescreen, but we think Hugh Jones is overpaid as well," she said, referring to Kaiser Southern California's chief executive. "What this amounts to is Kaiser's balancing their needs to compete on the backs of their health care workers."

Jobs emphasis

While both sides have made their claims, Spoltore and Jones said the issue boils down to just one thing: jobs.

"Probably the single most significant thing is the loss of jobs, and that probably will transpire as Kaiser goes along, and the numbers will likely be substantial," Spoltore said.

"The unions view restructuring as just pure job reduction," Jones said, "and they cannot come to grips with the hundreds of separate job descriptions that they have among their ranks, and the fact they're being short-sighted about this."

By having such delineations among jobs and not combining skills, Jones added, the SEIU membership is contributing to inefficiencies at Kaiser hospitals and making themselves vulnerable to cuts.

"In many instances, you have a patient seeing up to 50 hospital employees during a stay," Jones said.

Valentine and Jones believe the dispute will mark a departure from the low-key, regionalized labor negotiations that have been commonplace in California's heath care sector.

"There is clearly more cost pressure in health care these days, so costs become more and more of the focus, and the unions are trying to be tougher in the wake of downsizing," Valentine said. "With that the case, you are going to see more showdowns like this throughout the 1990s."