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Healthcare Insights: Physician Collective Bargaining

By John August

“Putting Patients First” is more than a nice sounding slogan. In 2014, Dr. Jack Cochran, former Executive Director of the Permanente Federation published a book with Charles Kenney, a prominent Boston journalist entitled The Doctors Crisis (Jack Cochran, MD, and Charles Kenney, Public Affairs Books, New York).  Dr. Cochran makes it clear that putting patients first is the essence of what it is to be a physician. “Physicians love being doctors because we have the privilege of being able to calm fears and alleviate suffering – to change and save lives.  This is what motivates doctors virtually every single day of their lives.  When the structure and culture in which physicians work are well aligned, it is a most rewarding job.”

The subtitle of the book is: “How Physicians Can, and Must Lead the Way to Better Healthcare.”  That subtitle speaks to the fact that things have gone quite wrong in the physician world.  “Fundamental flaws in our system make it more difficult and less rewarding than ever to be a doctor” (emphasis added). A 2012 Physicians Foundation survey indicated that “8 in 10 doctors were somewhat pessimistic or very pessimistic about the future of the medical profession. “

That was more than a decade ago.  Since that time, we have seen the greatest and fastest shift of physicians losing their  independent practitioner status to employees status.  That shift has occurred as healthcare consolidation has been occurring at lightning speed creating a concentration of decision-making and power in fewer and fewer hands.  The  American Medical Association (AMA) reports that 10 health systems alone employ 20% of all physicians!

That trend continues to accelerate with the expectation that within 5 years there will be 50% less health systems than there are today.

The net effect is that at the same time the industry consolidates, physicians have lost control of decision-making.

Dr. Cochran’s book is wonderful, inspiring and very practical. In it he explains that the physician crisis which he was writing about more than a decade ago is derived in large measure from the fundamental flaws in our health care system. Certainly, the increased interest and activity in physician’s unionization is being spurred by these fundamental flaws.

According to the most recent data from the AMA, more than 11,000 physicians joined unions in 2023-2024 YTD. The majority of these unionizing efforts are among interns, residents, and fellows. However, these numbers also include the successful organizing of 800 attending physicians and advanced practice professionals with Doctors Council SEIU in the largest private sector physician organizing campaign in private sector history at Allina Health in Minnesota. Currently, physicians are actively organizing in Massachusetts and Pennsylvania and in many other parts of the country.

It is reported that physicians’ unions’ phones are ringing off the hook from calls from physicians who work in hospitals, clinics, emergency rooms, and surgery suites, in facilities large and small and spread from coast to coast.

I have reported in previous articles in this website that prominent physicians such as Dr. Eric Topol and others have called for unionization of physicians.

In this month’s Healthcare Insights, I want to discuss some of the complexities, both opportunities and challenges, inherent in this new world of physician efforts to unionize. I also will share some thoughts about some reform in organizational strategy for both unions and employer response.

An October, 2023 article published in the AAOS NOW, the journal of the American Academy of Osteopaedic Surgeons, describes in detail many of these complexities.

The following statement from the article is among the best and most concise statements of complexity that I have seen in the literature on the subject:

“In the current healthcare model, increasing efficiency, reducing spending, and improving quality of care have led to practice consolidation and integration within hospital systems, which are heavily influenced by insurance companies and governmental entities. The momentum has resulted in the transition from physician-owned practices to physicians employed by hospitals or health systems, who now constitute up to 52.1 percent of physicians. This transition has changed the dynamic between physicians and healthcare systems, in which professional ethics can be weighed against the value of profitability.

Now more than ever, physicians must choose between the best interests of patients and the best financial interests of their employers. The stakes are high when patient care is on the line and an opportunity to improve the healthcare system is within reach.

A physician union presents one mechanism to alter the power dynamic between physicians and healthcare administrators, ultimately providing a counterforce to hospital corporatization. Physicians are patients’ ultimate advocates, and without requisite power to advocate, patients could be injured by cost-efficiency measures.”

The statement makes a strong case for unionization based on the foundational principle that the unique and central role of advocacy for patients by physicians is compromised by their employee-employer status. Healthcare delivery today, more and more, is driven by efforts to increase efficiency, reduce spending, and improve patient care by corporate practices under the control of the health system which employs the physician.

Physicians have lost control over their practices

As a result, we have a truly historic and classic case of a large category of employees who have lost voice and power to control the essence of their profession.

A recent comprehensive survey undertaken by the University of Chicago Physician Advocacy Institute established major categories of employed physicians’ deep concerns about practicing as employees in health systems and other corporate structures. These include:

  • Decreased time and communication were reported as top negative impacts of ownership changes on the physician-patient relationship
  • 56% of respondents said that cost of care to the patient has some impact on their clinical decision-making
  • Nearly half (47%) of respondents said that practice policies or incentives frequently led them to adjust treatment options to reduce costs
  • 37% of physicians report moderate or low autonomy in making clinical decisions
  • 61% of respondents have moderate or low autonomy to refer patients outside of their ownership structure/ system
  • 70% of respondents report employer uses incentives for physicians to see more patients
  • More than half (52%) of respondents lacked awareness of a formal process to resolve disputes at their workplace
  • 60% of respondents stated that they their current employer required them to sign a non-compete agreement
  • Frustrations with current employment are reflected in the 44% of respondents who said they would join a union if available
  • Amongst the compelling reasons they cite for wanting to retire early – burnout (74%) ranking the highest

Looking at these common lists of concerns held by physicians, it is certainly clear why there is such heightened interest in unionization among physicians.

I also know from many years of observation and experience that resolution of these and other concerns are very difficult in traditional collective bargaining which is the normal path that follows from the first step of unionization, which is to win recognition of the union by the employer.

I suggest that the time is now to address, in these nascent days of physicians’ increased interest in unionization, the relationship between the fundamental flaws in physicians’ experience of the deterioration of the patient-physician relationship and some of the challenges inherent in traditional collective bargaining. Furthermore, how can physician organizing efforts influence reform of traditional collective bargaining to evolve to solutions of root causes of problems, which traditional collective bargaining often does not achieve?

The below slide is from a recent webinar that I participated in, sponsored by the Scheinman Institute on February 7, 2024:

Slide about labor management turmoil

The healthcare delivery systems in the U.S. are consolidating. That consolidation is occurring for many reasons which includes the ability of already large and well-resourced systems, be they large academic medical centers, already strong systems in local markets, for-profit systems or private equity all with access to capital that smaller actors do not have. These powerful enterprises use their resources to merge, acquire, or otherwise expand ownership of hospitals, clinics, and physician practices.

It can be argued that these dynamics of consolidation are driven by greed and profit-seeking. Sadly, those descriptions of motivation are grounded in the reality that the U.S. healthcare system, while largely publicly funded (Medicare, Medicaid, Veteran’s Administration, and federal employee insurance programs) is delivered through the free-market of competition where the strong survive and the weak do not.

At the same time, it is very clear that there are features of healthcare financing and strategy, largely driven by the Centers for Medicare and Medicaid (CMS) policy that have added pressures to rural, smaller community and specialty hospitals as well as private physician practices. Commercial insurance tends to follow CMS strategies, so in truth, most healthcare delivery and financing are transforming. These strategies are designed in theory to address what have become the emerging truths about American healthcare:

  • That we don’t get what we pay for: the USA has the largest expenditures in the world on healthcare in raw dollars and per cent of GDP, while population health outcomes rank last compared to the rest of the OECD nations.
  • That fee-for-service payments (FFS) have been shown to be a root-cause of poor population health outcomes because these payment systems pay for services rather than outcomes, and in so doing lack payment incentives to emphasize prevention, patient education, and consistent use of evidence-based best practices.
  • Fee-for-service payment systems are being replaced by Value Based Payment (VBP) systems which pay for outcomes as opposed to services. These prospective payment systems place increased risk on the provider of care, that is, if outcomes are achieved, payments can include bonuses and incentives and positive margins, or by contrast if outcomes are not met, there are penalties and negative margins. The driving purpose of these systems is to incentivize improved health outcomes and to address the social determinants of health which are known to be the primary drivers of preventable chronic conditions, the largest driver of costs in the American health system.

Among other things, the above fundamental shift in financing of healthcare as described above, creates many challenges to the healthcare delivery systems of acute care and long-term care:

  • Requires deep investments in information systems, communication, and electronic, integrated medical records.
  • Requires deep investment in new care models and a new workforce, educated and trained to participate in patient-centered medical homes and similar emerging models designed to prevent illness, injury, and either unnecessary hospital admissions or re-admissions. Hospital care is the most expensive type of care setting, and in so many cases is unnecessary.
  • Requires vertical and horizontal integration of people, facilities, and technology.
  • Requires constant concern over cost structures due to the increased costs for labor, technology, and infrastructures. For many years reimbursement rates have been flat or falling.
  • Increased percentage of Medicaid-based payments which are the lowest reimbursement rate of all.

These are among the most important trends in healthcare financing which has put pressure on individual and group physician practices along with smaller, rural, and community hospitals to fail, and require infusions of capital to survive.

And, we cannot fully grasp the challenges in healthcare that impact all of us and physicians in particular, without the recognition that Artificial Intelligence (AI) is here, growing, and already playing a major role in diagnostics, treatments, and informatics. According to recent polling from the AMA, at least 65% of physicians believe that AI holds positive possibilities for health and healthcare.

At the same time, AI produces fears and anxieties among physicians and other healthcare workers from the fear of losing employment to fears of the unknown, and further possible erosion of the physician-patient relationship. Physicians know they must have a powerful and collective voice over the implementation of AI which is already central to the concerns of physicians and will continue as a major problem for all stakeholders.

The results of the consolidation of the healthcare industry has not produced improved health outcomes and has caused deep anguish among physicians and all healthcare workers. What is now referred to formally as the Corporate Practice of Medicine has become the driver of what Dr. Cochran identified more than a decade ago as “Fundamental flaws in our system make it more difficult and less rewarding than ever to be a doctor.”

Collective Bargaining Must Evolve

The “Doctors Crisis” as named by Dr. Cochran has been brewing and is now far past the boiling point.

Traditional collective bargaining is largely experienced as an antagonistic push and pull over “wages, hours, and conditions of employment” often defined quite narrowly and acrimoniously as labor’s efforts to modify working conditions in their favor versus what management defines as “inherent management rights” to control and manage the business/enterprise. Traditional collective bargaining is inherently polarizing and dispute oriented.

On the positive side there is no question that for many decades, traditional bargaining provided advances for the healthcare workforce establishing better wages, health and retirement benefits, paid time off, safety and health protections, and due process based on just cause, seniority, and right to arbitration to resolve disputes in a fair venue.

From the 1930’s to about 1980, there was steady union growth among health care workers, including a small percentage of physicians, mostly achieved BEFORE the passage of the 1975 amendments to the National Labor Relations Act (NLRA) which had up until then EXCLUDED healthcare workers the right to organize.

Many states passed laws enabling collective bargaining rights for public employees and private sector healthcare workers. Additionally, healthcare organizing prior to the 1975 amendments was very much linked directly to broader social and civil rights movements. By the time of the passage of the healthcare amendments which guaranteed the right of private sector healthcare workers the right to organize and bargain collectively, 27% of healthcare facilities had a union contract.

Surprising to many and very importantly, only 13.2% of healthcare workers belong to a union today. This means simply that healthcare organizing has not kept up with the growth of the industry.

It also raises important questions about deep flaws in US labor law and US labor relations. We remain a nation whereby union representation and collective bargaining are accomplished employer-by employer even though all the employment in any sector of the economy is profoundly influenced by the same or similar public policy, competitive, technological, and labor market dynamics.

These conditions incentivize an already deep corporate culture of profound resistance to unionization. That resistance is aided by some of the weakest labor laws in the industrialized world whereby sophisticated, systematic, and most-often threatening anti-union campaigning is the rule.

Traditional organizing and collective bargaining under these circumstances tend to leave labor and management scarred and mistrustful which perpetuates an experience and culture of acrimony, most often leaving out the parties’ ability to solve the underlying causes of the disputes in the first place.

Even in this atmosphere there are many on-going and new and improved agreements for less acrimonious labor-management relations including collective bargaining agreements which include labor-management committees, patient care committees, staffing committees, and joint workforce planning and development efforts well known in many parts of the healthcare labor-management system.

In an agreement between NYC Health+Hospitals (the nation’s largest public health system) and Doctors Council SEIU, all 22 of the City’s major facilities have established Collaboration Councils. These Councils bring together frontline physicians and executives monthly to identify issues of mutual concern that stand in the way of patient satisfaction and physician engagement all designed to improve care and professional and personal conditions for work.

The League of Voluntary Hospitals and 1199SEIU have established the Labor Management Project in New York City which is premised on the goals of ensuring employment security and quality improvement for 200,000 healthcare workers and the patients they serve.

Finally, there is the nearly 30-year experience of the Kaiser Permanente Labor Management Partnership (LMP) which has successfully brought improved growth of the Kaiser model and union membership along with best in class working conditions and among the highest performing hospitals, clinics, and health plan operations in the nation.

So, there is some history of efforts to solve problems and reduce conflict in the labor-management setting in healthcare.

I would argue that while these efforts produce some positive outcomes, most healthcare workers remain unorganized and where they are, strikes and job actions have increased, not decreased due in large measure to the transformed environment of financing and organization referenced earlier. Even Kaiser Permanente, after nearly three decades of labor peace experienced a brief strike by 85,000 members of the LMP in late 2023.

An emerging physician-led movement to confront the dissatisfactions with their chosen calling has great opportunity for success if the foundational approach to change is grounded in the root-causes of the problems that have led to that dissatisfaction.

Such an approach suggests that, as Dr. Cochran argues, that “physicians must come off the sidelines and join forces to seek a better way to advance physician satisfaction,” which includes some key specifics:

  • Demanding an engaged executive and management leadership, to create a system-wide vision with concrete objectives and goals that all stakeholders and employees can embrace
  • Data-driven improvement using computer-based technology to spur continuous improvement action
  • Team-based care
  • Patient-team partnership
  • Population health management and improvement
  • Continuous improvement in coordination and continuity of care
  • Continuous improvement of access to care
  • Escape from the shortened patient visit using technology, expanded care teams, and payment reform to incentivize outcomes as opposed to services

The above concepts ought to be a partial or expanded and localized developed set of principles that would drive organizing and collective bargaining. Through the identification of best practices in care and making those central to organizing and collective bargaining, physicians can do several things at once:

  • They should avoid the trap of the narrow definition of bargaining over wages, hours, and conditions of employment alone.
  • Physicians should lead on behalf of patients, the community, and the physicians from the beginning of the effort to organize. In so doing, physicians become leaders for healthcare improvement placing public policy, market dynamics and corporate practice of medicine in a position that to resist unionization means to deny what is best for the community as a whole.
  • They should create a clear purpose for unionization that is often misunderstood or not well received: that physicians have the power of their profession to lead the transformation of American healthcare.

Many argue that for American unions to grow and influence improved outcomes for working people of all classes and professions, there must first be labor law reform.

Many argue that for American healthcare to be affordable, accessible, and of the highest quality for all, there must first be comprehensive healthcare reform.

These are reasonable and necessary goals.

At the same time, we know from history that such reform rarely if ever happens exclusively from top-down policy making. History has taught us the efforts by people themselves to seek improvement has created the opening for lasting policy change. We have also learned that without sustained effort, improvements and gains are lost to the continuously transforming economic and social dynamics that impact policy.

Data and experience illustrate that physicians are now suffering from the failures of the American healthcare system. Physicians do play a unique role as the scientists who see each patient for diagnosis and treatment and procedures. Their fundamental role is under siege. While wages, hours, and working conditions remain and should remain central, the broader complex issues of the heart and soul of being a physician is at the heart of their dilemma, and ours as patients and the public at the same time.

Physicians are in a position to organize as a singular profession whose very existence is defined as being able to have a comprehensive and effective patient-physician encounter each and every time.

These are issues that can unify across all sectors of healthcare.

Organizing and collective bargaining should reflect these universal needs and expectations and ought to proceed across facilities in any geography to create movements of physicians that build a necessary community wide-dialogue for improvement.

That is the kind of action that can move policy, financing, organization, and purpose.

If physicians lead, many will follow.

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.