Healthcare Business News
Photo credit: SEIU-UHW

Calif. hospitals set to battle SEIU over capping charges

By Beth Kutscher
Posted: February 12, 2014 - 4:00 pm ET

The California Hospital Association is getting ready for a fight as the state's largest healthcare union moves to introduce a ballot initiative that would cap the prices hospitals can charge.

The Service Employees International Union-United Healthcare Workers West, known as SEIU-UHW, launched an extensive outreach effort this week to collect signatures from at least 505,000 registered voters. The Fair Healthcare Pricing Act of 2014 would prohibit hospitals from charging more than 25% above the actual cost of providing care. The SEIU is also seeking to cap not-for-profit CEO salaries at $450,000.

The campaign includes television ads in Sacramento, a public relations push and 500 paid signature gatherers. Six state legislators have already endorsed the initiative, and the SEIU says it has a third of the necessary signatures.

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The SEIU must submit the signatures by mid-April in order to qualify the initiatives for the November ballot.

The CHA, meanwhile, estimates that a price cap would severely harm its members, costing hospitals about $12 billion a year and resulting in 50,000 lost jobs. The group has set aside $10 million for its own campaign, Californians Against Initiative Abuse.

The SEIU collected signatures for a similar ballot initiative two years ago but reached an agreement with the CHA at the eleventh hour to work collaboratively on issues including rising healthcare costs and chronic disease management.

The agreement also stated that the SEIU hoped to gain 100,000 additional members by 2015. But the CHA has limited power to help the SEIU unionize hospital workers and the union's effort has faltered, said Jan Emerson-Shea, the association's vice president of external affairs.

“We were working together in good faith,” she said. “This is all about pressuring hospitals to capitulate to their demands.”

Dave Regan, president of the SEIU-UHW, said the parties have seen some modest success in working together, but the union doesn't believe hospitals have shown a commitment to lowering costs.

“Honestly, we just felt like we weren't making enough progress,” he said. “We made the choice that we want to go directly to the voters.”

Hospitals often point to labor costs as one of their largest line item expenses, at more than 50% of revenue. Asked why the SEIU was going after hospital earnings, Regan said creating quality healthcare jobs is not incompatible with holding down prices.

The union has pointed to data from the Office of Statewide Health Planning and Development to show that California hospital charges were $233.8 billion in 2012, more than four times higher than operating expenses.

Follow Beth Kutscher on Twitter: @MHbkutscher

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