Union seeks to cut California hospital billings, boost care for poor

As healthcare workers gathered outside California hospitals recently to collect signatures for two proposed ballot initiatives, they told voters the measures would rein in excessive hospital billings and expand healthcare for the poor.

Unspoken in the public pitch was the fact that the measures, backed by the Service Employees International Union and aimed at private hospitals, would have a major effect on facilities the union has tried unsuccessfully to organize, while exempting those where many of its members work.

Dignity Health, the state’s largest hospital chain, and Kaiser Permanente, the largest HMO, would not be subject to the proposals. The measures would prohibit their private competitors from charging more than 25% above the actual cost of providing care and require nonprofits to devote at least 5% of their patient revenue to free care for the poor. The union represents nearly 60,000 workers in those two systems.

Hospital industry representatives and consumer advocates said the proposals, while noble in broad strokes, would ultimately result in a competitive advantage for the already dominant players in California’s healthcare market. But the proposals would fail to eliminate the problems of medical inflation and inadequate charity care.

At least a quarter of California’s private hospitals would be exempted from the measures, according to the state’s nonpartisan legislative analyst and others. Public hospitals are exempted as well, because most of their patients receive government assistance.

“It’s like a marijuana regulation initiative that leaves out Humboldt County,” said Jamie Court, president of Consumer Watchdog, a Santa Monica-based advocacy group. “There’s no good reason” to exclude Kaiser and Dignity, “two of the largest providers in the state.”

SEIU officials countered that Kaiser and Dignity are model providers and described the potential ballot propositions as a “very substantial step to getting cost under control” at hundreds of other California hospitals.

“The initiatives [would] affect three-fourths of the industry,” said Dave Regan, president of SEIU-United Healthcare Workers West. “If people want to criticize that we only got three-fourths, then so be it.”

The SEIU has been trying to buff its image and broaden its reach in the wake of a corruption scandal and vicious infighting that led some members to create a rival union. Opponents of the measures noted the timing of the petition drive, which comes as the SEIU negotiates new contracts for healthcare workers.

The union says it expects to gather enough signatures to qualify the measures for the November ballot by April, when its contracts at various hospitals begin to expire.

“This is really about a union using the initiative process to try to get targeted hospitals to buckle to their union demands,” said Jan Emerson-Shea, a spokeswoman for the California Hospital Assn., which represents more than 400 hospitals and health systems in the state.

SEIU officials said they had good policy reasons to exempt Kaiser and Dignity. Kaiser, they noted, runs its own insurance company and does not have to report the same financial data to the state as other hospitals do.

“It’s a different business model,” Regan said. “People can say that’s convenient for Kaiser — but it happens to be true.”

Union officials offered a different rationale for Dignity, formerly known as Catholic Healthcare West. They said it is already the largest provider of care to low-income Californians.

Since 2006, California has limited the amount hospitals are allowed to charge low-income patients and requires providers to inform patients of available financial aid. State law also requires nonprofit hospitals to perform charity care in exchange for their tax-exempt status — but does not define such care.

Regan noted that, even with the exemptions, the two proposals would still affect hospitals that employ about 30,000 SEIU members.

Last month, as SEIU members kicked off the signature campaign, they brought clipboards and banners to a familiar location: Sutter General Hospital in Sacramento. The union has tried without success to organize the hospital’s parent company for years.

The workers, in purple SEIU shirts, alleged that Sutter overcharged patients by 426% on average, while maintaining $3.2 billion in reserves. In an interview, Sutter spokesman Bill Gleeson disputed the figures but said medical inflation occurs at all hospitals to offset the low reimbursement rates of government agencies.

“This has been a flawed model for many years, and it’s not sustainable,” he said, “but these initiatives aren’t the solution.”

Workers disagreed.

“Outrageous healthcare costs affect us all — whether you have insurance or not,” said Susie Boedecker. “It’s time to make hospitals accountable.”

michael.mishak@latimes.com