Kaiser CEO ad­dresses pay, union strike, la­bor strat­egy

The Fresno Bee (Sunday) - - Insight - BY CATHIE AN­DER­SON can­der­[email protected]

Just be­fore more than 80,000 work­ers an­nounced Mon­day they planned an October strike against Kaiser Per­ma­nente, Kaiser CEO Bernard Tyson talked with The Bee about the union's con­cerns about pay in­equity, la­bor strat­egy and con­cerns voiced by work­ers.

Lead­ers of the Coali­tion of Kaiser Per­ma­nente Unions said their strike will be­gin Oct. 14 and will last seven days in Cal­i­for­nia, Colorado, Wash­ing­ton, Ore­gon, Mary­land, Vir­ginia and the District of Columbia.

Those go­ing on strike work as op­tometrists, clin­i­cal lab­o­ra­tory scientists, res­pi­ra­tory and x-ray tech­ni­cians, li­censed vo­ca­tional nurses, cer­ti­fied nurs­ing as­sis­tants, sur­gi­cal tech­ni­cians, phar­macy tech­ni­cians, phle­botomists, med­i­cal as­sis­tants, house­keep­ers and more. More than half of the 80,000 are mem­bers of the Ser­vice Em­ploy­ees In­ter­na­tional Union-United Health­care Work­ers West.

Here are Tyson's answers to ques­tions posed by The Bee:

Q. Will pa­tient care be af­fected by any strike?

A. “A strike ... ob­vi­ously cre­ates the chal­lenges of us need­ing to pre­pare for all pos­si­ble sce­nar­ios, and we will be­cause we will al­ways make sure we're tak­ing care of our mem­bers.“

Q. Sacra­mento, and the state of Cal­i­for­nia, has seen a num­ber of high-pro­file strikes and protests this year and in 2018 af­ter la­bor con­tracts ex­pired. Right now, Gen­eral Mo­tors work­ers have walked out for the first time since 2007. How would you as­sess the labor­man­age­ment re­la­tion­ship right now?

A. “If you look at the state of Amer­ica right now,... many are feel­ing that they have not ben­e­fited from all of the ef­fi­cien­cies and the wealth that have been cre­ated over … time – 10, 20, 30, 40 years. I think there's a lot of un­rest in our coun­try to­day.

“I think in some ways, the unions feel like 1) this is an op­por­tu­nity for them to stand up and be counted more and 2) peo­ple are look­ing for oth­ers to help to raise some of the le­git­i­mate is­sues that should be dealt with in terms of the in­equities of pay against the mar­ket and all the other chal­lenges that peo­ple gen­er­ally are feel­ing around the coun­try . ...

“I think that the union is try­ing to find its voice over­all in the de­bate that is go­ing on, and that's what made them so ef­fec­tive over the years inside of Kaiser Per­ma­nente, that they

have in fact been a voice at the ta­ble and a re­spected voice at the ta­ble. On many oc­ca­sions, I've sat down with them and we've come up with a bet­ter an­swer be­cause ... they are part­ners at the ta­ble. That's the way to go.”

Q. If they have been treated as part­ners, why are roughly 80,000 mem­bers of the Coali­tion of Kaiser Per­ma­nente Unions go­ing on strike?

A. “About 25 years ago, we formed this la­bor man­age­ment part­ner­ship, and 12 of the 16 unions formed a coali­tion of unions, and that's the la­bor side of the la­bor-man­age­ment part­ner­ship. I was there. I was one of the ar­chi­tects that ac­tu­ally es­tab­lished the la­bor-man­age­ment part­ner­ship that lasted 25 years and hope­fully it's go­ing to be here for an­other 25 years.

“We be­gan to have con­flict about two years ago, driven by SEIU's new lead­er­ship … Dave Re­gan . ... Things be­gan to be­come more tense inside of the coali­tion, and about two years ago, it reached a tip­ping point where nine of the 12 unions came for­ward and said that they be­lieved they were go­ing to sever their re­la­tion­ship with the coali­tion.

“They didn't be­lieve in the phi­los­o­phy that this leader was pro­mot­ing, which was more tra­di­tional bar­gain­ing, mov­ing away from in­ter­est­based bar­gain­ing, as we have done through­out the years, the res­o­lu­tion and dis­pute pro­cesses that we've had in place. He be­lieved that wasn't ag­gres­sive enough . ...

“We started na­tional bar­gain­ing, and the day that we started na­tional bar­gain­ing, nine of the 12 unions sev­ered their re­la­tion­ship with the coali­tion, and then they formed what's called an Alliance of Health Care Unions. They came to man­age­ment, and they said, ‘We would like to re-es­tab­lish the part­ner­ship,' and we reestab­lished the part­ner­ship with them and we ne­go­ti­ated a con­tract, and we have a won­der­ful agree­ment that works for them, and it works for us. It works for our em­ploy­ees and it works for our af­ford­abil­ity agenda for our mem­bers and our cus­tomers.

“Dur­ing all of that time, we main­tained con­ver­sa­tions with the re­main­ing unions in the coali­tion and told them that we still want to have a part­ner­ship with you, but we have to also work on your part­ner­ship be­hav­ior for this to be ef­fec­tive. The al­ter­na­tive is just to have a la­bor re­la­tions, but we have ev­ery in­ten­tion of reach­ing a fair and eq­ui­table agree­ment with you as well on be­half of our em­ploy­ees.”

(Denise Dun­can, pres­i­dent of United Nurses As­so­ci­a­tion of Cal­i­for­nia/Union of Health Care Pro­fes­sion­als, con­firmed that she and eight other union lead­ers sep­a­rated from the coali­tion af­ter their mem­ber­ship made it clear they wanted to con­tinue the part­ner­ship. The new alliance rep­re­sents more than 45,000 Kaiser em­ploy­ees. The Bee re­quested an in­ter­view with Re­gan but has not re­ceived a re­sponse.)

Q. The union, how­ever, has said that Kaiser has lost its way and is not putting mem­bers and the com­mu­nity first. It points out that your non­profit or­ga­ni­za­tion posted $5.2 bil­lion in profit in the first half of this year and is sit­ting on $37 bil­lion in re­serves. How do you re­spond?

A. “We are a $80 bil­lion rev­enue com­pany, thanks to the trust that mil­lions of peo­ple have put into Kaiser Per­ma­nente, and I've put the bottom line (op­er­at­ing in­come) at 2 per­cent. That's 2 cents on the dol­lar that goes into our cap­i­tal pro­gram for new hospi­tals, new build­ings, etc. It goes into our cash flow to make sure that we have money flow­ing through the sys­tem.

“It goes to our com­mu­nity ben­e­fit (to fund lo­cal needs), which we set ev­ery year and it's cur­rently al­most $3 bil­lion, if not more than $3 bil­lion com­mu­nity ben­e­fit that we pro­vide across the coun­try as a not-for­profit, and so the idea that we're try­ing to max­i­mize profit is just ir­ra­tional and ob­vi­ously from a man­age­ment stand­point, it's not ac­cu­rate.

“Our re­serves cover iron­i­cally things like re­tire­ment ben­e­fits for our em­ploy­ees. We have some­thing in the neigh­bor­hood of 300,000 to 400,000 em­ploy­ees that are either re­tired and/or are re­tir­ing in our fore­cast­ing pe­riod that by law we're re­quired to cover the pen­sion fund­ing and other fund­ing that you know is a big is­sue in this coun­try.”

Q. By the way, they also note the size of your salary at $16 mil­lion a year. Amer­i­cans, over­all, in­creas­ingly are ex­press­ing con­cern about the size of CEO salar­ies. Do you hear that?

A. “The re­al­ity is we're paid to a mar­ket like oth­ers are. I know a lot of peo­ple have ques­tions and con­cerns about how CEOs are paid, and ob­vi­ously unions have been talk­ing about what they be­lieve to be my com­pen­sa­tion level.

“When you look at my com­pen­sa­tion, which is ac­tu­ally man­aged by the board of di­rec­tors, it is against the mar­ket rate of other CEOs of other com­pa­ra­ble-sized or­ga­ni­za­tions. We're an $80 bil­lion or­ga­ni­za­tion with a quar­ter of a mil­lion work­ing inside of Kaiser Per­ma­nente tak­ing care of al­most 13 mil­lion peo­ple.”

Q. What can you tell me about the pack­age you're of­fer­ing coali­tion em­ploy­ees?

A.“The av­er­age em­ployee in SEIU makes about 20-plus per­cent above the mar­ket, so this is not even a catch-up­with-the-mar­ket is­sue that we're deal­ing with. This is Kaiser Per­ma­nente say­ing, ‘Look, with our af­ford­abil­ity agenda, we can no longer sim­ply pass on the cost by say­ing, “OK, so for la­bor fees, let's just give you an­other per­cent or two even though it's not jus­ti­fied against the mar­ket what­so­ever.'...

“In the alliance agree­ment, we were able to do a cou­ple of things. One, we rec­og­nized that the mar­kets in Cal­i­for­nia are very dif­fer­ent than the mar­kets out­side of Cal­i­for­nia. In the mar­kets in Cal­i­for­nia, be­cause the cost of liv­ing is higher, we had some­thing like 3 per­cent (an­nual wage) in­creases that we did . ... In most of our mar­kets out­side of Cal­i­for­nia, we were able to do about a 2 per­cent (an­nual wage) in­crease and then a 1 per­cent bonus. That was a dif­fer­ent way of de­liv­er­ing on the eco­nomics of that pack­age to those mar­kets.”

“We also did some­thing around ed­u­ca­tional fund, which is one of our big ini­tia­tives of how we think through the whole re­tool­ing and re­train­ing of em­ploy­ees.”

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