Nurses working without a contract at Group Health Cooperative of Puget Sound have adopted a new strategy to try to get the HMO to come to terms.
After staging a one-day strike on March 22, nurses in District 1199NW of the Service Employees International Union report little progress in negotiations. Group Health made a "last and final offer" that the union's negotiating committee found "unacceptable," union spokeswoman Karen Zytniak said. "It was fundamentally the same offer that nurses rejected a month ago, which prompted the one-day strike" (April 3, p. 38).
Now the nurses union is raising the ante. In press releases and letters to the state insurance commissioner, it's questioning the governing ethos of the latter-day cooperative.
Specifically, the nurses are highlighting the alleged "corporatization" of Group Health's internal culture, its steadily rising profits, high executive salaries and lack of public accountability.
On April 6 union President Diane Sosne requested that Washington State Insurance Commissioner Deborah Senn investigate Group Health's finances and internal organization. "We are concerned about the direction GHC is moving in its creation of a holding company that is accountable to neither consumers nor the cooperative's members, and which is serving as a shelter for certain investments in three for-profit subsidiaries," Sosne wrote.
The nurses have made an issue of Group Health's 28% profit increase in 1994 and Chief Executive Officer Phillip Nudelman's $433,707 compensation, reports of which come at a time when the HMO is cutting staff and taking a hard line with its unions. According to a report filed with the state, the co-op earned $34.5 million on $797 million in revenues last year, compared with earnings of $26.9 million on $753 million in revenues in 1993.
The insurance commissioner has started to examine Group Health's finances, sales, claims and marketing practices. Spokeswoman Belle Taylor-McGhee said Senn is particularly interested in executive compensation.
Senn, a Democrat, has proposed a Holding Company Act in the Washington Legislature that would, among other things, regulate financial transactions between for-profit subsidiaries of not-for-profit organizations. Group Health and most of the insurance industry have opposed the bill. It has not been enacted.
In a press release, the nurses union cast the changes in Group Health in a historical perspective. Founded as a "community-based cooperative owned by its members and dedicated entirely to meeting the health needs of its members," the union said, Group Health "historically operated under a set of progressive principles that focused on the rights and needs of consumers and employees, as well as a policy of openness and avoidance of secrecy." Now that culture has been transformed from "cooperative to corporate."
"It's a tactic," responded Group Health spokesman Marc Osborn. "It certainly isn't true. Group Health isn't operating in any other fashion than it has in the past." Group Health has acted entirely within the law and its executive compensation is in the middle range, he said.-J. Duncan Moore Jr.