Tenet to Allow Two Unions to Organize

Tenet Healthcare Corp., facing numerous legal battles and government probes, sought to eliminate a major headache Friday by forging an unusual pact with two labor unions that have been trying for years to organize workers at Tenet hospitals.

The agreement would allow the Service Employees International Union and the American Federation of State, County and Municipal Employees to conduct organizing campaigns and hold union elections at 28 Tenet hospitals in California and two in Florida -- with the blessing of hospital management.

If nurses and other workers at the hospitals vote to be represented by either union, they would be guaranteed pay raises of 8% in the first year and 7% in each of the next three years.

Those percentage increases are about what many nurses have been getting in recent years -- with or without unions behind them -- but Tenet workers may see an advantage in voting for a union because that could give them a greater voice in the workplace.

The California Nurses Assn., an independent labor group that has been competing with the SEIU to organize hospital workers, blasted the agreement as an “illegal, fraudulent” attempt to bribe Tenet employees. The group said it would file charges with the federal labor board in hopes of thwarting the deal.

For Santa Barbara-based Tenet, the nation’s second- largest hospital chain, the agreement with the unions provides some clear benefits. The SEIU, in particular, has been using its political connections in Sacramento to make life difficult for the hospital company, which has been beset by scrutiny from regulators, lawmakers and others for effectively gouging Medicare and charging excessive hospital rates, among other questionable practices.

The pact with the unions presumably would mark an end to SEIU’s so-called corporate campaign against Tenet and enable it to focus on restoring its business and reputation -- and on resolving federal investigations into heart surgeries at a Tenet hospital in Redding and doctor recruiting practices at its medical center in San Diego.

“Normally, [Tenet] would want to contest unionization, but they need good labor relations right now,” said Nancy Weaver, an analyst at Stephens Inc. in Little Rock, Ark. “This agreement is going to cost Tenet more money than it would like, but peace with the unions is an intangible that you can’t put a value on.”

Tenet shares rose 88 cents to close Friday at $15.59 on the New York Stock Exchange.

Tenet operates 40 hospitals in California. The California Nurses Assn. represents nurses at four of them. Combined, SEIU and AFSCME, both affiliated with the AFL-CIO, have contracts at eight of Tenet’s hospitals. Unionized nurses tend to earn more than nonunion counterparts. Tenet declined to provide wage figures. The hourly pay for nurses in the private sector in the Los Angeles area was $30.02, according to a 2002 survey by the Labor Department.

For SEIU and AFSCME, the main appeal of the agreement with Tenet appears to have been the opportunity to represent all of the company’s nonunion hospitals in the state. Tenet, with about 35,000 employees in California, is the last of major hospital chains in the state that is largely nonunion.

Sheryl Skolnick, an analyst at Fulcrum Global Partners in New York, said Tenet’s agreement with the unions “bordered on brilliance” on the part of management.

“It sets up the probability of predictable labor costs and arbitration instead of strikes,” she said. She also said in a report to investors Friday that the deal could help Tenet neutralize the aggressive attacks by the nurses group by opening up the hospitals to rival unions.

The SEIU said the California Nurses Assn. was offered the same deal by Tenet but refused. An association spokesman denied that, saying it was shut out of the agreement.