Two labor unions in California are capitalizing on Tenet Healthcare Corp.'s recent setbacks involving Medicare reimbursements and physician relationships to strike a deal with the beleaguered hospital chain, a healthcare analyst said.
Tenet, which recently reached a three-year deal with the Service Employees International Union and the American Federation of State, County and Municipal Employees, is now battling the California Nurses Association, which earlier this month filed unfair labor practice charges against the company with the National Labor Relations Board.
The Santa Barbara, Calif.-based hospital chain reached agreements with the two unions that would allow them to hold union elections at Tenet's 41 California hospitals and two in Florida (May 5, p. 3). Tenet owns 114 hospitals.
The decision to form an alliance with the unions is a good move for Tenet because it helps officials get a grasp on its future operating environment, said Darren Lehrich, an analyst with SunTrust Robinson Humphrey Capital Markets. A less adversarial relationship with its workforce will decrease the likelihood of work stoppages and will lend some stability to its future earnings picture, he said.
"Management is trying to put a little more predictability into their cost structure," he said. "I view this arrangement as one important step in the process."
Tenet, which faces federal investigations into its physician relationships and whether two nonemployed physicians performed medically unnecessary procedures and falsely billed Medicare at a Tenet hospital, is in a vulnerable position, he said.
"In a lot of ways, Tenet's situation is unique," Lehrich said. "It is a national story and the unions have capitalized on that."
Nurses who join the union could see raises of up to 29% over four years, according to the pact. In the first year, workers would be guaranteed pay raises of 8%, followed by raises of 7% in each of the following three years. The two sides also would rely on an arbitrator to resolve bargaining issues to prevent work stoppages or strikes.
Nurses also would be able to join a quality improvement initiative and a training program, which both sides marketed as an opportunity for employee advancement and a way to ease nursing shortages.
But the CNA said the contract violates labor laws because it ties future salary increases to union participation. "They are saying the only way you can get a raise is by joining (the) SEIU," CNA spokesman Charles Idelson said. "It is outrageous. You cannot condition pay raises to joining a union."
A Tenet spokesman declined to comment about the unfair labor practice charges filed by the CNA.
Idelson said the pact does not offer pensions or retirement benefits and there would be no ban on mandatory overtime. "Tenet has systematically undervalued its (registered nurses)," he said. "Registered nurses are behind the standard of almost any barometer of other RNs represented by CNA."
Tenet spokesman Harry Anderson said nurses and healthcare workers would be able to choose whether to join the unions.
"It is a process governed by NLRB rules where the unions would have a right to organize," Anderson said. "It will certainly take some time."
The process already has begun as more than 500 healthcare workers voted to organize a union at 130-bed Kennedy Memorial Hospital in Indio, Calif.
Deborah White, a registered nurse at Kennedy Memorial, said the right to join a union would improve operations. "The possibilities are endless in how we can improve patient care," she said. "It gives us a voice."