Healthcare Insights: The Strike at Kaiser Permanente: Causes, Lessons, And Opportunities

It was announced on November 9, 2023, that the 75,000 members of the Coalition of Kaiser Permanente Unions (CKPU) who struck for 3 days in October, officially ratified by a 98.5% majority the tentative agreement reached with Kaiser Permanente on October 13th.

In last month’s Healthcare Insights, we reviewed the terms of the agreement and discussed some of the reasons why the 26-year-long Labor-Management Partnership (LMP) failed to prevent the strike, the first national strike in that long period of partnership.

This month we will continue the analysis.

First, the issues that provoked this strike and the many others over the past two years (more strikes than any time in the past 20 years in healthcare) are long-standing and, in my view will remain unresolved without fundamental course correction. Conditions in the healthcare industry will continue to create disillusionment and militancy for the foreseeable future, just as broader economic realities for most Americans continue to deteriorate.

Second, since the labor-management relationship at Kaiser Permanente is among the largest in the country in terms of workers involved (unions represent 75% of the 200,000+ workers at Kaiser Permanente) this article will examine the broader implications of what increased militancy and strike activity means for the labor movement based on the Kaiser Permanente-Union experience.

Third, the principles in the Labor Management Partnership ought to be broadened and embraced by healthcare labor and management to avoid unnecessary conflict while healthcare delivery is expanded and improved.

In the lead-up to the strike, the focus of the unions was on wages and understaffing. These issues have been at the center of the increased number of strikes in healthcare over the past two years.

The Brookings Institute issued a major report at the beginning of the pandemic in spring, 2020.

Wages

The above-cited report explains the root causes of the centrality of the wage disputes we are seeing in healthcare. The facts are quite clear that lower-wage workers, who make up the majority of healthcare workers in the U.S. have been in the words of the report, “essential, but undervalued and underpaid” for a very long time.

Median wages for the 7 million people who work in these essential but undervalued jobs, as of 2019, one year before the pandemic hit, was $13.48/hour. This meant that 20% of these workers lived in poverty and nearly 40% relied on some form of public assistance.

In a Washington Post article published on October 16, 2023, I made the point that: “The crisis for the healthcare workforce has been around for a very long time, and inflation and the pandemic have ripped off the bandage. It’s high time that we deal with this, and I do predict that there’s going to be a lot more conflict before there’s labor peace in health care.”

Upward pressure to increase wages for these essential but undervalued healthcare workers has been building for a long time. The Service Employees International Union (SEIU) and the labor movement led a campaign that resulted in Governor Newsom of California signing a bill into law earlier this month, which raises the minimum wages of healthcare workers in California to $25/hour. The strike at Kaiser Permanente included a demand for a $25/hour minimum. This was a visionary demand by the union, one made on behalf of healthcare workers everywhere!

It is very important to point out that Kaiser Permanente has paid higher than market wage rates for many years, accompanied by an excellent package of health insurance, pensions, sick leave, vacation, and educational benefits. A $25/hour threshold will not be a big stretch for Kaiser Permanente to achieve. Over the course of more than 20 years of national bargaining with its LMP-affiliated unions (about 140,000 workers) wages and benefits have grown without strikes until this year. However, if you take a look at wage settlements over these years, wage increases even at Kaiser Permanente, have barely kept up with the cost of living in one of the highest wages and benefit environments in the industry. From 2010-present, annual across-the-board wage increases range from 2-3%. See “Contracts and Agreements”.

With unprecedented inflation rates hitting Americans in the immediate aftermath of the height of the pandemic, the healthcare industry, like most other industries in the U.S. faced an embattled and discouraged workforce from that experience, who simultaneously experienced a drastic erosion of their purchasing power. What was true across the nation was also true at Kaiser Permanente. While Kaiser Permanente workers have done better than their counterparts in other parts of the country and with other employers, they faced their own experience of inflation outpacing wage increases quite substantially.

Staffing

The other major issue in the Kaiser Permanente dispute and the strike was understaffing. This is another issue that pre-dates the pandemic in the healthcare industry. The attached article provides a comprehensive overview of a decades-long shortage of healthcare workers. Registered Nurses are often the focus of workforce shortages, vacancies, turnover, and burnout. It is important to recognize that workforce staffing shortages run throughout the occupational landscape of healthcare

The healthcare provider shortage is more than an inconvenience, it’s a public health crisis. And it has been building since before the COVID-19 pandemic. Healthcare staffing shortages lead to poor patient outcomes that can include hospital-acquired infections, patient falls, and increased chances of death, according to the American Association of Colleges of Nursing. Provider shortages in certain areas mean that large swaths of the population don’t have enough doctors or nurses to provide them with emergency care, treat their chronic illnesses, or deliver their babies.

It is often cited that about 500,000 healthcare workers left their jobs during the pandemic.

Why Are There Staffing Shortages in Health Care?

Healthcare industry experts have been sounding the alarm about the staffing shortage for decades. Several factors have contributed to a perfect storm for the industry.

Aging Population

The U.S. Census Bureau reports that 16.8% of the population was aged 65 or older in 2021, and it predicts that number will grow to 21% in 2030. Older people often require more care, whether in hospitals or nursing homes. They are more likely to have chronic illnesses such as diabetes, arthritis, and heart disease and need care for conditions such as dementia.

Burnout

Healthcare providers are vulnerable to burnout, defined as physical, emotional, and mental exhaustion. Burnout can cause poor performance, which can lead to medical errors. It can also cause feelings of guilt and shame among providers.

Burnout can lead directly to staffing shortages in healthcare, as people leave the profession. According to a survey by staffing agency Incredible Health, 34% of nurses said they would leave their jobs by the end of 2022, with 44% saying that stress and burnout contributed to their decision.

Lack of Nursing Faculty

The American Association of Colleges of Nursing has identified a lack of nursing faculty as a contributing factor to the nursing shortage. Nursing colleges turned away 80,407 applicants in 2019-2020 due to a lack of capacity. Faculty pay is often too low and doesn’t attract qualified professors. With the nursing pipeline constrained at the beginning, the profession can’t keep up with rising demand.

Most states lag behind in training opportunities for entry-level positions in healthcare as well as nursing.

The Unprecedented Experience of the Pandemic

The workforce shortages in healthcare that existed pre-pandemic became an overwhelming crisis during the pandemic. Healthcare workers on the frontlines of care experienced daily fear: fear of contracting the virus and bringing it home to their families. Adding to that fear was an inconsistent supply of effective personal protective equipment (PPE).

Additionally, healthcare workers experienced moral injury as never before. That is the state of mind and experience that healthcare workers face due to the inability to prevent their patients from becoming very sick and dying, especially in the first year of the pandemic. Recall that there were no medicines, therapies, or vaccines to combat a novel virus for which humans had no immunity! Nurses, technicians, nursing assistants, clerical employees, transporters, housekeepers, and dietary and maintenance workers saw death and lingering illness on a scale they had never experienced in their careers.

The U.S. Must Have Complete Transformation of its Healthcare System

It is long overdue that every American should have affordability, easy access, the highest quality, and safety in a system, which keeps them healthy as opposed to intervening only after illness and injury.

Also central to the public and political landscape of the nation is having a sustainably secure and highly engaged workforce to meet the needs of every American. If that day should come, the 26-year experience of the LMP and its foundational tools and methods to promote mutual gain should serve as the model for such a labor-relations system.

The healthcare workforce, led by their unions must adapt to the challenges: the industry must recruit a new and diverse workforce and elevate the skills of non-licensed personnel to be a partner in team care, with much more capacity to be central participants in healthcare teams that keep people healthy and out of hospitals.

All healthcare workers must be empowered and organized to work at the top of their scope and licensure creating a more engaging and rewarding career and enhancing retention. Technological advances should connect all healthcare team members to one another, across disciplines and locations, using healthcare resources much more effectively and efficiently. This will prevent chronic conditions, reduce unnecessary emergency room visits and hospital admissions, promote palliative care, and so many other best practices that improve health and decrease cost.

All of these needed reforms in care delivery will require substantial changes to traditional work settings and roles, schedules, work rules, staffing, education and training, mentoring, and a transformation of decades-long outmoded hierarchies of decision-making.

Such changes will provoke acrimony and disputes in traditional collective bargaining, or in the absence of collective bargaining.

Such change can be achieved effectively and with reduced disputes if the lessons and methods of problem-solving, patient focus, and mutual gain inherent in and so well practiced in the Kaiser Permanente LMP became part of a new era in labor relations.

As things stand, disputes and strikes in many industries, including healthcare are likely to continue. The nation’s workforce is expressing what Jacob Hacker, political science and law professor at Yale has been writing about since the Great Recession: that for decades, Americans are living a life as a YOYO…you are on your own… (Jacob Hacker, The Great Risk Shift, Oxford University Press, 2006).

Without power and voice, working families have not kept up with market forces. Most don’t have secure jobs and retirement, or affordable healthcare and childcare, housing, or equal access to high-quality education. They don’t have paid time off to rest and recover whether it be from illness or just the day-to-day of working hard to scrape by paycheck to paycheck.

The Pandemic Ripped Off the Bandage.

I see the LMP not as a failure…rather it is among the great ideas that need a home, not just at Kaiser Permanente, but as central to the national demand for realigned commitment by leaders from all sectors to confront our social realities and heal the nation.

Growth of union voice can and must be achieved. The LMP is more than a great experiment in innovation in collective bargaining. At its heart, the LMP realigns how people engage with one another. We know from the practice and principles of interest-based dialogue, among the central tenets of the LMP, that when parties identify mutual interests in a problem to be solved, 80% of those interests tend to be mutual in nature.

We can solve seemingly intractable problems based on identified and accepted mutual interests.

In the case of healthcare, in the U.S., more than $4 trillion is spent each and every year. Staffing shortages prevail, while less-than-living wages prevail, and transformed care delivery moves at a near snail’s pace even as life expectancy, maternal and childhood mortality, and other foundational measures place the US at the bottom of health outcomes compared to all other wealthy nations.

Are there not easily identifiable mutual interests in solving these problems? Of course, there is. It has often been said that without a strong labor movement, democracy itself is threatened.

Democracy Begins at Work 

There’s a strong argument that giving ordinary Americans a say over how their workplaces are governed is just as fundamental to democracy as giving them the ballot.

These days, political liberty is often defined narrowly as the freedom to vote in fair elections. But in earlier eras of American history, genuine political freedom was thought to have a material component: To truly participate in self-government, one needed not only a voice in public affairs but also a modicum of power in one’s economic life. Franklin Roosevelt articulated this principle when introducing his Economic Bill of Rights in 1944, telling Congress, “We have come to a clear realization of the fact that true individual freedom cannot exist without economic security and independence.”

In the last couple of years, we have experienced a rise in worker militancy in response to the deep inequalities and inadequacies of the U.S. economic system that impact the overwhelming majority of Americans.

In this regard, there is much to learn from the strike at Kaiser Permanente:

1. The unions and Kaiser Permanente went 26 years without a work stoppage. The pandemic, workforce shortages, and inflation overwhelmed a well-established partnership, and labor peace was broken by forces deeply embedded in the healthcare sector.
2. Though the strike occurred, the leaders committed to repairing and learning to live under the principles and practices of the LMP as they stated at their settlement press conference in October 2023, with Acting U.S. Labor Secretary Julie Su present.
3. Those principles and practices require the parties to build systems from frontline unit-based teams through all facilities, regions, and national functions that are based on mutual interests designed to achieve mutual gain. Systems in place include:
   1. Patient-focused and measurable continuous improvement practices, including incentive bonuses when goals are achieved, which are designed to improve the health of the members of Kaiser Permanente.
   2. Employment and Income security which promotes re-deployment of the workforce in response to technological advances and care re-design. This building block of the LMP is among the most important innovations in labor-management relations, which requires the employer to maintain employment for its workforce while also requiring the unions to be flexible in the interpretation of traditional seniority and lay-off procedures to train and deploy workers in their interest and in the interest of patient-focused system change.
   3. Acrimony in the growth of union members is removed based on a long-standing election procedure agreement, which allows unorganized workers the ability to join the union without employer opposition. This is not only an important building block of the labor-management relationship, but even more lasting is the building of positive labor relations that is usually delayed after traditional union organizing campaigns. Positive labor relations are a necessary component of labor-management innovations.
   4. Life-long learning and career advancement leads to lower turnover.
   5. Industry-leading wages and benefits which are seen as part of the strategic purpose of the labor-management relationship on an equal footing with achieving the highest quality of patient care, safety, and patient experience, while keeping care affordable. These goals are embraced as integrated mutual interests whereby the achievement of all is seen as one holistic goal and mission.

In the last two years in particular, I have had healthcare management and healthcare unions reach out with increasing frequency and ask: How can we get ahead of what we are sure will be a difficult negotiation in the next bargaining cycle? These inquiries often come just after settlements of difficult negotiations or strikes have concluded.

Inherent in these inquiries is recognition, broader than most care to admit, that the current labor-management relations system is not adequate to resolve the deep-seated causes of disputes.

It is my hope that the post-pandemic and economically insecure era we are in will:

• Promote more experimentation with the principles that have proven successful in the Kaiser Permanente LMP for 26 years.
• Enable labor, industry, and government to work in a tri-partite fashion to establish lasting solutions through new systems of interest-based dialogue in the public interest. Restructuring of healthcare financing which incentivizes value and punishes poor outcomes reduces administrative costs and unjustified profits, along with assistance in the building of the physical and human infrastructure to truly meet the needs of the population. These are issues that labor, industry, and government must work on together for there to be sustained improvement.
• Experiment with sectoral bargaining and organization whereby wages, benefits, workforce shortages, and care transformation take place across employers and individual health systems. Cooperation and coordination, often called integration are necessary for meeting the needs of the patient populations, reducing wasteful and redundant practices, expanding medical records systems, and building primary care systems that are designed for prevention of illness and injury.
• Rather than compete for the workforce, build one healthcare workforce with equal opportunity, wage, and benefit security, across employment boundaries, thereby reducing turnover and recurring vacancies, and creating lifelong careers.

The current wave of worker militancy in healthcare ought to be seen as an opportunity, even a necessity to extend worker voice across the nation. The issues driving militancy will not be resolved system-by-system, facility-by-facility, or negotiation-by-negotiation since the underlying issues impact the industry and the workforce as a whole.

Traditional collective bargaining and non-union sectors will continue to exist for the foreseeable future. It will likely take a long time for new ideas and experimentation with collective problem-solving, mutual interest, and mutual gain to take hold. There is a long history to overcome.

However, there is a new movement afoot that may change the dynamic in unforeseen ways: physicians are clamoring for unionization. Just last month, the largest private sector unit of attending physicians won representation in a National Labor Relations Board (NLRB) election in the giant Allina System in Minnesota, when 600 clinicians voted 325-200 to become part of Doctors Council SEIU.

To say that the unions’ telephones are “ringing off the hook” from physicians all over the country looking to unionize would be a real understatement.

I suggest it is pretty clear that a new day is upon us.

John August is the Scheinman Institute’s Director of Healthcare and Partner Programs. His expertise in healthcare and labor relations spans 40 years. John previously served as the Executive Director of the Coalition of Kaiser Permanente Unions from April 2006 until July 2013. With revenues of 88 billion dollars and over 300,000 employees, Kaiser is one of the largest healthcare plans in the US. While serving as Executive Director of the Coalition, John was the co-chair of the Labor-Management Partnership at Kaiser Permanente, the largest, most complex, and most successful labor-management partnership in U.S. history. He also led the Coalition as chief negotiator in three successful rounds of National Bargaining in 2008, 2010, and 2012 on behalf of 100,000 members of the Coalition.