Hospitals, union fight over patient costs
Ballot measures in Palo Alto and Livermore would limit charges, give cities auditing power
In a high-stakes election campaign with statewide implications, a health care union is spending millions to sway voters in two Bay Area cities to cap how much hospitals can charge patients.
The hospitals, led by Stanford Health Care, are fighting back with their own millions to deliver the message that the union is more interested in signing up new members than containing patient costs.
The battle is being waged through election ballots on both sides of the bay, where Measure U in Livermore and Measure F in Palo Alto would force every hospital and health care provider in those two cities to charge patients no more than 15 percent above the industry-established cost of provided medical services. But opponents say the measures will be expensive to implement, and patients themselves are unlikely to see any actual savings.
In their approach, the local measures are similar to statewide Proposition 8, which would limit California’s 588 dialysis clinics to a profit of no more than 15 percent above service costs. Prop. 8, which was drafted by the same union, is setting records for campaign spending.
The union — Service Employees International UnionHealthcare Workers West — says it put the local measures on the ballot to lower health care costs. It wants the cities of Livermore and Palo Alto
to serve as neutral watchdogs by auditing the hospitals to make sure they don’t overcharge patients.
The cities want nothing to do with that, however, saying they’re not staffed to audit hospital expenses and can’t afford to do so. Livermore estimates such oversight would cost about $10 million over five years, and Palo Alto has
indicated it would have to raise city taxes and cut services to do so.
The hospitals, Stanford Health Care, Kaiser Permanente, Sutter Health and John Muir Health, have spent $4.1 million so far on the campaign against the measures through a political action committee called
Protect Our Local Hospitals and Health Care, according to Secretary of State campaign finance filings.
The committee has raised at least $2.6 million in Livermore and spent a little more than $2 million on TV, radio, online ads and other campaign literature, according to the latest state and local campaign finance forms.
In Palo Alto, the committee has spent $1.3 million on similar campaignrelated expenses, according to the latest forms filed with that city.
On the other side, a union PAC called Service Employees International Union United Healthcare Workers West Political Issues Committee has spent at least $1.6 million in Livermore and
$1.01 million in Palo Alto on voter data, online ads and other campaign literature, according to finance forms filed in the respective cities.
What it really boils down to for the union is creating leverage in negotiations, said C. Duane Dauner, former CEO of the California Hospitals Association, which is leading the “no” campaigns against the two measures.
The dispute began in 2017 while Stanford and the union were negotiating salaries for 1,800 contracted employees at the hospital, Dauner said. SEIU leadership “was pressing to force Stanford to agree to be neutral” in its bid to recruit new members at the university’s health care facilities in Redwood City, Emeryville, Pleasanton and Livermore. Had it agreed to remain neutral, Stanford would have refrained from
advising employees whether to join the union.
“UHW wanted to bias that process,” Dauner said.
That’s also Stanford Health Care’s take on the dispute. It says the union wants direct access to nonunionized employees of its health care facilities to recruit them.
Right after the contract was signed in September without the unionsought neutrality clause, Dauner said SEIU started a campaign against Stanford. Early this year, SEIU started trying to qualify patient-cost ballot measures in the five cities where it has facilities. Although it couldn’t collect enough signatures in Emeryville, Redwood City and Pleasanton, where Stanford Health Care has medical centers or offices, it succeeded in Palo Alto and Livermore.
SEIU maintains this battle
isn’t a labor issue at all. That’s a “moot point” since a contract was reached last September, said union spokesman Sean Wherley.
“They will fight to oppose union membership … but the initiative is improving the care and costs of patients and bringing down the overall costs of health care,” he said. “It’s strictly on pricing and how they’re gouging people in those two communities.”
According to SEIU, Stanford Health Care charges more for its services than the statewide hospital average. For example, it charges 138 percent more to treat a patient with chest pains and 125 percent more to treat a patient with kidney failure, according to SEIU, which says it received data from the state.
Meanwhile, the cities of Livermore and Palo Alto say they don’t want any part of
sifting through those kind of figures. Livermore says its community development department would get stuck with the task of examining the billings of all patients in the city’s hospitals to determine whether they’ve been overcharged, according to the city attorney’s impartial analysis. The measure includes all health care in the city, not limited to Stanford, as well as doctors, chiropractors, dentists and individual or group health care providers.
In a public statement, Stanford Health Care says passage of the ballot measures would force it to reduce its budget by 25 percent, resulting in significant cutbacks and possible closures of many services and programs.
But Wherley said Stanford had $235 million in profits last year and he doubts it will cut staff if the
measures pass.
Stanford noted the measures would not really affect what patients are actually charged for services. Because Medicare and MediCal reimburse health care providers less than what it actually costs to treat their clients, hospitals bill insured patients at a higher rate to recover costs.
“If you eliminate the provider’s ability to cover these payment shortfalls, they will operate in the red,” Dauner said.
Although the hospitals aren’t about to move into different cities if the ballot measures pass, other medical offices such as dentists, podiatrists and optometrists could choose to do so to avoid dealing with the measures’ impact, Dauner said.