Kaiser Permanente's 1997 landmark pact with the AFL-CIO is still very much a work in progress.
The 19-month-old experiment in labor-management collaboration helped Kaiser open hospitals in Los Angeles and Sacramento, Calif., on schedule last month and is easing tensions and creating opportunities to do business in new ways elsewhere within the giant managed-care organization, according to labor and management sources.
The partnership is intended to smooth labor relations at Oakland, Calif.-based Kaiser, improve quality and efficiency within the sprawling 8.5-million-enrollee organization, and make Kaiser more attractive to potential union enrollees by positioning it as the most labor-friendly managed-care plan around. It does not directly address collective bargaining, although both sides hope it will make bargaining less acrimonious.
But the seeds sown in the spring of 1997 have yet to develop deep roots. Sources on both sides fear that severe financial pressures on Kaiser could keep the partnership from becoming as fruitful as labor and management had hoped for.
Putting many of its goals into practice may be a long-term proposition.
"We still, admittedly, have a long way to go," says Peter DiCicco, executive director of the AFL-CIO Coalition of Kaiser Permanente Unions, which represents the more than 50,000 unionized workers covered by the partnership. "I don't think any of us fully understood how huge (an enterprise) it was."
Mixed results. So far, the partnership has smoothed the way for two new AFL-CIO bargaining units in North Carolina and several more in Northern California, but it hasn't resulted in a flurry of new organizing activity. Similarly, Kaiser isn't yet crediting the controversial arrangement with attracting large numbers of new union health plan enrollees-a key goal of the partnership, from the company's perspective.
DiCicco predicts it will take at least three or four years for the partnership to become securely established in Kaiser's corporate culture-time the partnership may not have, given its fragility and the difficult environment ahead for Kaiser.
Gary Fernandez, Kaiser's senior vice president in charge of the national labor-management partnership, tallies a long list of the partnership's accomplishments. But he acknowledges that it hasn't yet affected Kaiser's ability to market its wares to other unions and that it may get squeezed in Kaiser's ongoing fiscal crunch.
"I'm confident (about the program)," Fernandez says. "I'm not confident about the level of resources."
Origins. The pact, which covers 55,000 Kaiser workers in 26 AFL-CIO unions, or about 61% of Kaiser's nonphysician work force, resulted from meetings in early 1997 between Kaiser Chief Executive Officer David Lawrence, M.D., and AFL-CIO President John Sweeney. It was overwhelmingly approved by workers in May 1997.
Kaiser was started in the 1930s as a private health plan for the Kaiser construction workers who built the Grand Coulee dam in Washington state and later for Kaiser shipyard workers in the San Francisco Bay Area. It has traditionally served a high percentage of union members in California. By the mid-1990s, however, the company and several of its largest unions were at loggerheads. Tight financial times and a new, harder-nosed Kaiser stand on unions-along with an unusually militant approach by the California Nurses Association-led to friction, notably a series of short CNA strikes against Northern California Kaiser facilities in 1997 and early 1998. Service Employees International Union members supported some of those strikes.
Job categories covered by the partnership include some nurses, optometrists, X-ray and laboratory technicians, social workers, pharmacists, and clerical, maintenance and service workers.
But making the pact's promise a reality is proving to be more of a stretch than anticipated, even though Kaiser used the opening of its new 163-bed Baldwin Park facility near downtown Los Angeles in early October to ballyhoo the partnership's success.
It took Kaiser, working with its union partners, just seven months to get the facility up and running, compared with a more typical 15- to 18-month schedule at Kaiser.
Kaiser officials are positioning Baldwin Park, and to a lesser degree a new 116-bed hospital in Roseville, Calif., near Sacramento, that also opened last month, as models that could lead to "self-directed work teams." In the next few years, those teams would replace the factory-like model of demanding supervisors and recalcitrant workers.
Awaiting the dawn. But the new era has yet to dawn, according to many observers.
Even at Baldwin Park, several labor sources say it's too early to tell whether the partnership's role will live up to the hype surrounding it.
"Addressing all the issues jointly" certainly helped Kaiser achieve its goal of opening the hospital on time, says David Bullock, president of SEIU Local 399, which represents service workers at the facility. But Bullock expects it to take another six months to fully assess whether the partnership is equally successful in achieving labor's objectives.
Nonetheless, Bullock and other labor leaders generally concede that Kaiser involved workers to an unprecedented degree in many decisions about staffing, design and other critical elements of the new facility. Rank-and-file workers helped draft seniority rules affecting the transfer of jobs from Kaiser's facilities in Sacramento. However, Sal Roselli, president of SEIU Local 250, warns that Kaiser hasn't come through with the same level of training and support at the new Roseville facility. He expresses concern about what that means for the future of the relationship.
"I'm struggling with them over (the training issue)," Roselli says.
Kaiser officials say the differences between the two newly opened hospitals' training and level of union involvement in planning are primarily because of the roles organized nurses play at the facilities. Baldwin Park's nursing staff, which is represented by the United Nurses Association of California, is part of the partnership agreement; Roseville's nursing staff, represented by the CNA, is not.
Kaiser's shaky financial future-the company says this year's deficit could exceed last year's $266 million in losses-and opposition from powerful groups on both sides of the labor-management spectrum could still overturn the successes achieved to date. The CNA, which represents about 8,100 registered nurses in Kaiser's California bailiwick, never signed on to the partnership and continues to try to discredit it.
CNA officials insist their acrimonious year-and-a-half-long contract battle with Kaiser paved the way for Local 250's speedy contract settlement-not the partnership relationship-and that other factors are responsible for most of the accomplishments the partnership is taking credit for. In fact, the feisty nurses' union negotiated a formal job-transfer agreement with Kaiser's Roseville facility "weeks before" the partnership struck an agreement there, says Jim Ryder, the CNA's Kaiser division director. But he contends Kaiser delayed formalizing the agreement so the AFL-CIO unions' participation in the partnership could be credited for the facility's smooth opening.
CNA officials say traditional collective bargaining-and the threat of strikes and other work actions-is still the best mechanism for union-management relations.
Meanwhile, Kaiser's financial woes are causing skeptics in management to rethink the agreement.
And the SEIU's Roselli believes Kaiser's doctors-members of independent Permanente Medical Groups that contract with the system's hospitals and health plans-"aren't really into this yet." He says this is his "biggest anxiety" about the partnership.
Accomplishments. But the deal has achieved some tangible successes, at least according to proponents of the collaboration. Among them:
Both sides credit the speedy opening of the Baldwin Park medical center to a unique training process and management's willingness to involve workers in decisionmaking. The building was completed in 1994 but was never previously used as an inpatient facility because of Kaiser's predictions at the time that enrollment would slow.
A partnership steering committee generated ideas that improved efficiencies in the new facility's six operating rooms, which could save hundreds of thousands of dollars, says Gary Lulejian, M.D., Kaiser's regional medical director for the San Gabriel Valley.
The turnaround time between operations, for example, has been reduced to 15 minutes or less compared with 45 minutes at other Kaiser facilities, Lulejian says.
A mid-September compromise spared about 100 jobs in a Kaiser optical lab in Berkeley, Calif. In return, the unions agreed to various policies that improved efficiency at the facility.
Kaiser officials estimate those savings could total five times the amount that would have been saved if the organization had eliminated jobs as originally planned.
Last spring's contract negotiations with SEIU Local 250, which represents some 15,000 Kaiser workers in Northern California, were unusually painless. "Takeaway" contract demands by Kaiser were taken off the table, and Local 250 won a 9% wage increase over three years, including a 1.5% increase that took effect six months early.
Grievance-resolution procedures were successfully integrated at Kaiser's South San Francisco medical center, which labor leaders say had been the subject of a "huge backlog" of union grievances and National Labor Relations Board complaints.
But mandatory training of all managers and labor leaders at the facility last fall and the involvement of union members on various hospital committees, including those charged with hiring, have made an enormous difference, Roselli says.
Staffing of new call centers in Northern California was also worked out in collaboration with union participants. The negotiations included details such as job descriptions, dress codes, shift schedules and telephone scripts.
For example, at a new Sacramento call center, the union determined which members had seniority in the hiring process, and it helped Kaiser fill roughly 400 jobs without generating a single grievance-a result Kaiser executives describe as "amazing."
Kaiser's support-at the AFL-CIO's behest-of a historic needle-safety law that calls for healthcare employers to study the need for specially designed needles to prevent needlestick accidents among caregivers.
California Gov. Pete Wilson signed the measure into law in late September, largely because of Kaiser's support.
So far most of the positive labor developments have come in California, and even Kaiser officials acknowledge the process has been much slower and less certain in other parts of the Kaiser empire. Progress is finally beginning to be made in outposts such as the Denver metropolitan region, Ohio and Portland, Ore., says the AFL-CIO's DiCicco.
"We're going to see within the next 18 months whether this really begins to reach more and more of the work force," DiCicco says.
Although the labor alliance is supported by Richard Barnaby, Kaiser chief operating officer and California division president, as well as other key leaders, the SEIU's Roselli says: "I'm worried about Barnaby's ability, because of (Kaiser's) extremely complicated bureaucracy, to move fast enough. And I'm worried about the financial resources to make it work."