By Peter Gamble, BC Publisher
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Progressives speak constantly of the destabilizing role that giant corporations play in American society. After years of gritty "trench warfare" with what had been the "worst" company in the rapidly privatizing health care industry, two of the nation's largest unions found a way to flip the script. The future of organized labor lies in strategies that effectively threaten to destabilize the targeted corporation, itself, rendering its business plan worthless and stock value, questionable.
Such is the core lesson that emerges from last month's historic agreement between two allied unions - the Service Employees International Union (SEIU) and the American Federation of State, County and Municipal Employees (AFSCME) - and Tenet Hospital Corporation, the most aggressive privatizer of community hospitals in the country. It is a complex tale that in the end turned on a simple premise: Absent labor peace, Tenet could not fulfill its business plan or achieve projected earnings through continued acquisition of new hospitals. Tenet was forced to learn that it needed a Master Agreement with its employees. The unions proved that they could destabilize the guys with the money.
Tenet's President and new acting CEO, Trevor Fetter, admitted as much, May 14. "Tenet has been the only large multi-hospital system in California that is primarily non-union," said Fetter, in a conference call to the company's largest stockholders. "As you know, we have been the target of a corporate and organizing campaign by several unions in California which has become contentious, costly and disruptive. This agreement radically changes those dynamics for the better."
That's an understatement. In signing the agreement, Tenet went from being "primarily non-union" to, in the words of SEIU Health Care Division director Larry Fox, "the first healthcare company that is a majority union company." For the 25,000 employees at 40 hospitals in California and Florida potentially covered by the Master Agreement, it's a brand new day.
"In the first pay period after they vote to have a union, they get their first raise, then they elect local bargaining committees to do local issues," said Fox. Management is to remain "neutral" in the elections process, a near-guarantee of SEIU and AFSCME representation since, says Fox, "we start with the assumption that 60 percent want a union. With the general crisis in health care, workers are concerned about their livelihoods."
Express line to a raise
receive an immediate 8 percent raise in the first year, 7 percent in succeeding
years of the four-year contract, housekeepers around 6 percent in the
first year. The company has also agreed to include employees in shaping
a "nationwide quality improvement initiative and a national training
and upgrading program" - a mechanism that enables employees to avoid
being "structured out" of their jobs. The "partnership,"
as Tenet President Fetter describes it, also allows the unions to gather
vital data on the changing health care industry, on a national basis.
Thus, the unions will know as much about the industry as their opposite
corporate numbers, and a lot more than anybody in the public sector -
information of strategic value in coming battles.
Just as importantly, the agreement empowers AFSCME and the SEIU to strengthen their ties to the public at large - the patients.
"This is a huge breakthrough for everyone who works in these Tenet hospitals, and for their patients too," said Luisa Blue, RN, President of the SEIU Nurse Alliance of Southern California. "For registered nurses and other health care professionals, it means having a real voice in patient care decisions in their hospitals."
Under the Master Agreement, union employees at Tenet's four hospitals in right-to-work Florida will get the same deal as their counterparts in California, a "huge breakthrough," said Fox. "If workers want to have a union, they do it on the basis of the Master Contract."
The sea change in labor relations could not have been foreseen, a year ago. Traditional organizing methods, fashioned in the days before the advent of hyper-aggressive, voraciously acquisitive national and multi-national corporations, now often lead to nowhere. "We would not have organized Tenet just by passing out leaflets in front of a hospital," said veteran organizer Fox. "If you just use traditional methods of organizing, the workers just get slaughtered."
Corporations have elevated union-avoidance to a high art. "If you get over the hurdles and manage to win an NLRB election you suddenly realize there is just no power" and wind up with an agreement that "more resembles what you have in a right-to-work state in the South," said Fox. "You might get two or three percent raises" - not much more than might be expected at a non-union hospital, and not enough to risk your job for.
Cornering the health market
AFSCME and SEIU are the most politically astute unions in the nation, skilled at leveraging their combined memberships of 3 million to maximum legislative and state house effect. But corporate money plays that game, too, with platinum chips. At best, unions have managed only to slow the corporate assault on the civil and public sectors - institutionally embodied in the nation's non-profit hospitals, under siege by Tenet and the even larger Hospital Corporation of America (HCA). These corporate vacuum machines scour the landscape for hospitals that are on the ropes because of a national funding system that is "under attack" - by the same forces that demand privatization. The financial disarray is so acute, says Fox, "it can't be resolved" except by legislative means - a perfect environment for Tenet and HCA's feeding frenzy.
It's a big market. Of 5,000 acute care hospitals, nationwide, only 750 are for-profit. Tenet and HCA own about 300 of them. The rest of the national acute care system represents growth and escalating stock prices for the privatizers, who seek to buy up blocks of hospitals in targeted cities in order to create health monopolies and, eventually, raise the price of care.
Tenet became a darling of Wall Street by squeezing the system until the poor screamed. SEIU's Fox calls Tenet's treatment of uninsured patients "turbo-charged." The corporation was notorious for garnishing wages, and for attaching the homes of unemployed workers who fell behind in their bills. Medical "discounts" that are available to insured patients were denied to the uninsured, 85 percent of whom, Fox points out, work for a living.
More insidiously, Tenet manipulated its patient services so that a disproportionate amount of their hospitals' procedures could be billed at "market rates" through a "loophole" in Medicare regulations - the rush to cutthroat advantage that would lead to Tenet's management's undoing.
SEIU and AFSCME, close collaborators in health care since they abandoned fratricidal turf warring a few years ago, pressed the political buttons as best they could. Non-profit hospitals are considered "charitable assets" of the communities in which they operate. Sale to for-profit outfits like Tenet and HCA must be reviewed by the state attorney general's office, and hospital boards can sometimes be swayed by arguments more powerful than the purchaser's checkbooks.
The SEIU plan to stop the healthcare conglomerate's expansion began when it blocked Tenet's attempt to purchase a small cancer research hospital in California. Next came a big opportunity in Kansas City, where 11 non-profit hospitals were put on the block, the kind of "market position" a privatizer kills for. Tenet was said to have the inside track on the deal. The SEIU advised the hospitals that they should reconsider selling to anyone, "but if you do, don't sell to Tenet." Competitor HCA walked away with the prize. But the Tenet juggernaut rolled on.
Following Kansas City, Tenet attempted to purchase a unionized hospital in Pottstown, Pennsylvania. An aroused SEIU stopped the sale. After that, "we had Tenet's attention," said Fox.
Wall Street intervenes
The fatal crack in Tenet's armor was revealed, ironically, by Wall Street analysts, who discovered that a large chunk of Tenet's earnings were based on the "loophole" in medical payment regulations so methodically exploited by Tenet's portfolio builders. The corporation's reputation was shredded when, in October of last year, the FBI raided a Tenet-owned hospital in Redding, California, where two doctors were suspected of performing unnecessary heart surgeries so that they could be billed through the loophole at "market rates." However, that's human interest news, of little concern to Wall Street. What shook Tenet to its core was the analyst's conclusion that Tenet's profit projections were "vulnerable to a shift in government policies" - not a good bet for investors.
In the space of a few weeks, Tenet's stock plummeted from $52 a share to $14. (It now hovers around $16.) The topmost heads at the company, rolled. Trevor Fetter took the big seat.
The unions turned their megaphones up, and cajoled Democrats with clout in California to advise Tenet that now was the time to seek some semblance of stability by making peace with SEIU and AFSCME, who were ready with their Master Agreement.
With his fellow capitalists howling all around him, Fetter welcomed the chance for four year's of workplace calm. "We have simply provided an orderly mechanism for employees to choose whether or not they want to join a union," he explained to the hardliners, last month. "If they choose to join one of the unions that are in our peace accord then they will know in advance what the terms of an agreement will look like." The other side of this coin is that Tenet will also know what's in its future, on the labor front.
Fetter paid the unions their due in a March 19 talk to investment analysts, the people who can make our break a company quicker than the thickest picket line.
In addition to the union agreement, Fetter promised "to figure out how to give the uninsured some discounts" on treatment and to cease attaching the homes of the unemployed.
Corporate pressure points
SEIU and AFSCME strategists are under no illusion that they engineered the Tenet reversal by dint of their own genius. Wall Street analysts, after all, blew the big whistle on the corporation's over-valued stocks. However, the unions had their megaphones in place, and were able to "capitalize" on revelations of Tenet's frailties at the critical juncture.
The employer's weak points are no longer clustered at the plant gate or the hospital receiving room. Rather, they may be hiding in the folds of padded portfolios, or the contradictions of their business plans. "In the most global sense, the American labor movement needs to figure out how to deal with huge national and international companies if we are going to survive," said the SEIU's Larry Fox. "That old style of one-by-one [organizing] is an obsolete style, when the community hospital has been bought by a national chain."
There is a larger lesson in this story. Hospital corporations operate in the same environment as the rest of corporate America. The bubble they seek to inflate around themselves is filled with the hot air of speculation, nowadays based on relentless acquisitions and fantastic projections of future profits. Their business plans are largely wish lists, fragile documents of intentions.
Like a mad herd that never sleeps, these omnivores ravage the social and economic fabric of the nation, creating a chaos in which security is just a memory. Yet they live and breath in a world of death by headline. Each of these corporations is headed by cutthroats willing to exploit the rumored weaknesses of the other before an audience of speculators whose thumbs turn up or down faster than any crowd at a Roman Coliseum.
To bring the fight to the enemy, one must threaten what they hold most dear. An executive may not cry out when an expendable company is hit by a strike. But he writhes at the prospect of the lost acquisition, and comes unglued when moods turn sour on the only "Street" that counts in his world.
The howls of Wall Street brought chaos to Tenet's corporate boardroom, forcing the survivors to seek sanctuary in a model union contract. Yet the stock values of virtually every U.S. corporation are based on growth projections made of mist. Stock analysts are all ears. There is a great deal to talk about, in every corporate configuration. Rather than simply rail at the destruction wreaked by corporate disorder, unions and other social movements must take advantage of the inherent disorder of corporate life, itself. Then plug in the megaphones, and bring chaos to the boardroom - until they sue for peace.
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