by Cara Gardner

Empire Health Services had a funny way of celebrating National Nurses Week earlier this month. It was just a week after the corporate parent of Deaconess and Valley Hospital, among other local clinics, had watched many of its nurses and techs decide to form a union.

When a union organizer brought a cake into Valley Hospital for the nurses there, it was quickly seized by security guards. Now known as "the cake incident," it is cited by pro-union forces within the EHS workforce as proof of how petty -- and ugly -- the struggle has become.

Shawn Lockman, an LPN at Valley Hospital, witnessed the incident. "The security guards came in and asked whose cake it was," he recalls. "We said 'It's for Nurses Week, and have a piece.' And he said, 'I understand this cake was provided by the union, and I have to confiscate the cake.' We thought it was a joke, but he was dead serious and started putting the lid on the cake and said that he had direct orders from his supervisor. I don't think he was real thrilled to be doing it. He was just following orders."

EHS spokeswoman Janice Marich claims the administration had a right to take the nurses' cake away. "We have a policy of anyone from the outside coming in, that they must get prior approval," she says. "My understanding was they didn't go through proper policy."

Some nurses found this explanation unfair, as pharmaceutical reps bring in lunches and other treats for doctors on a daily basis.

"Isn't it childish?" asks Eric Melone, an RN in the emergency room at Valley Hospital. "It's just a preview of what we're in for in this negotiating process during the next year. We're in for an interesting fight."

Boiling Point -- Two years ago, nurses and technicians with Empire Health Services (EHS), the parent nonprofit corporation for Deaconess Medical Center and Valley Hospital (among other area clinics), started a genuine dialogue with Service Employees International Union (SEIU), the largest nurses' union in the nation. Some employees said they had had enough; it was time to take a stand.

"I've been [at Deaconess] since 1988, and this was the third attempt to unionize," says Joan Palm, an RN in the Cardiac Intensive Care Unit at Deaconess. "A misconception is that Deaconess [nurses] organized because we got the pay cut," Palm continues, referring to a company-wide 9 percent pay cut that became effective April 4. "That's not true. We've been doing this for two years. It's got to do with our professional voice, our standard of care."

The National Labor Relations Board (NLRB) requires at least 30 percent of workers at one organization to request a union vote before they will set one up. When the nurses and techs at EHS were galvanized, the NLRB was called in to establish a date for the union vote. On April 24, nurses and technicians from the Valley Hospital and Deaconess took to the polls.

"The vote was very close and there were a group of ballots set aside because there were questions about whether those voters were eligible to vote," explains Carter Wright, spokesman for the union's 1199 Northwest chapter.

Either the union or the employer can "challenge" votes based on eligibility, which Wright says usually has to do with how long employees have worked at a facility, or if they are on administrative leave. The vote is sealed by the voter and set aside. Until the NLRB determines whether the voter is eligible, the ballot is not counted.

Despite EHS administration hopes, nurses and techs at the Valley Hospital -- and the techs at Deaconess -- voted to unionize. Nurses at Deaconess voted not to unionize by a margin of just 14 votes. Palm claims that the day Deaconess nurses were voting, the hospital administration broke some NLRB rules.

"There are windows in the personnel department and mini-blinds on those windows," says Palm. "You had to walk past those windows to vote. The NLRB said the blinds needed to be closed on voting day, and those blinds are always closed anyways. But on voting day, the blinds were open.

"We lost the vote because people didn't come to vote," insists Palm. "Now, was that innocent? I don't know. That's up to the NLRB."

If the NLRB rules that its rules were broken, it could force another vote. And because the union was defeated by such a small margin of votes for the Deaconess nurses, the challenged ballots that remain uncounted could change the outcome.

"The number of challenged ballots, 23, is greater than the margin of difference in the counted balance," Wright explains. Basically, he says, the fight's not over.

Is Anybody Listening? -- Going back more than 100 years, the struggle to unionize has often been difficult. The NLRB was formed in 1935 to enforce fair labor laws. Today, along with union reps out to organize workers, there are legal and consulting firms that specialize in preventing and dispelling union campaigns. When such a struggle hits a hospital, it can be especially troublesome, as the quality of patient care comes into question.

It's complicated further by the fact that hospitals throughout the country are dealing with blows from all sides. An increasingly complicated system of under-reimbursement from Medicaid and Medicare, expensive technologies, delayed pay from private payees, higher numbers of uninsured clients and high-stakes competition over services with other regional hospitals have left many hospitals struggling to stay out of the red, let alone make profits.

Empire Health Services, Spokane's second-largest employer, is in the red. In 2002, Deaconess Medical Center had a negative operating margin of $2.7 million, and Valley Hospital suffered from a negative operating margin of $1.5 million. EHS claims 52 percent of its charges are to Medicaid and Medicare, while at the Valley Hospital, that amount rises to 59 percent. A report published by the Washington State Hospital Association claims hospitals only get reimbursed for about 60 percent of all Medicare and Medicaid charges.

The bad news for hospitals continues, with malpractice litigation and skyrocketing costs. But employees at Empire Health Services say they were dissatisfied with their work environment long before they felt the squeeze of the most recent cost-cutting efforts. Nurses and technicians say there has been an ongoing pattern of mistrust between employees and administration at EHS.

"I think, from my point of view and also speaking with many staff, over the past several years there's been a lack of communication between administration and employees," says Melone. "We've felt we haven't been given a chance to be heard on our issues, and when issues are brought forth, very little to nothing has been done to confront those."

Melone explains that although pay cuts weren't the initial cause of employee dissatisfaction, finances did play a large role in shaping the desire for union representation.

"We've been behind the pay standards -- and of course administration has denied this -- but I work with people who have done some on-call stuff [from Sacred Heart], and they talk about their base pay and it's a lot more than mine," says Melone.

Sacred Heart's nurses and technicians are unionized.

As support for a union grew, union representatives called employees, knocked on their doors and handed out information about what kinds of bargaining tools they could have if they unionized.

As the union process proceeded, the SEIU says EHS administrators hired an outside consultant to help organize a campaign to discourage the union. It was a campaign many employees say was expensive, relentless and negative.

Union representatives passed out their own literature, promising employees they'd have a place at the bargaining table. Melone says at first many employees weren't interested in unionizing.

"I've never supported unions in the past. But I owed it to myself and my profession to educate myself," Melone says. "The hospital started doing open presentations so we could listen to their financial pitches and their side of things. I read every handout the hospital put out and also attended the union meetings, so I did everything I could. I told others to get educated and look into it."

But Palm says some of their right to get educated about the unions was hindered by the administration's anti-union campaign. Unwittingly, the administration's attempts to prevent the union raised questions among staff, creating a stronger resolve to work together, perhaps pushing the union through in the end.

"I think Deaconess has spent a good deal of money portraying every negative aspect," says Palm, "including taking facts out of context to portray that SEIU [goes on] strike every time. They don't tell you how many times they've successfully negotiated a contract."

The Inlander offered to share the perspective of Empire Health Services CEO Tom White on these issues with Inland Northwest readers, but he declined via spokeswoman Janice Marich.

Besides a few comments, Marich did offer this written statement: "There are legal challenges to the NLRB vote conducted on April 24, 2003. Until those challenges filed by the SEIU are resolved and the results of the election certified by the NLRB, the hospital will not be making any comments."

Union Busting? -- When and if the company does comment, employees say they have plenty of questions. Speculation about how much EHS spent on the anti-union consultant run anywhere from tens of thousands to hundreds of thousands of dollars. Yet the fact is, unless the consultant had direct contact with employees, EHS doesn't have to reveal how much it spent.

The Inlander did gather piles of anti-union materials distributed by EHS administration. Memos gave employees a list of some of the top reasons to say no to unions: "I've got too much self-respect," "Unions would rather cause problems than work together," "Unions are only about power and money for the ones that run the union," and more. EHS reminded its employees that it was under "no legal obligation to sign a contract" with employees. "We're not predicting that there will be a strike," the memo reads, "but it's always a possibility."

In a leaflet issued by Julie Meyer, assistant vice president of human resources with EHS, employees were told: "We trust you to make the right decision... we encourage you to vote 'NO' on April 24." Yet in other leaflets, EHS claims adamantly: "EHS will not and has never told employees how to vote."

In another memo, EHS reminds employees that unionizing will make working conditions more strenuous. "Remember that an employer does not have to agree to any demand or make any concessions it does not think are in its best interest."

Several pieces of literature clarify that, legally, EHS does not have to cooperate with the union: "If there is an impasse in bargaining, the employer can legally implement its proposals with or without union agreement," the literature reads. On the same page, EHS outlines what will happen if employees strike: "Pay stops, benefits can stop and the Company could stop paying premiums for various insurance programs. Strikers could... permanently be replaced by new hires... if competitors like Sacred Heart took advantage of a strike, physician and community loyalty could be lost and very difficult to ever recover."

"The campaign the administration ran is highly negative," says Diane Sosne, an RN and the president of SEIU 1199, Northwest. "A lot of the information in their literature is plain wrong, plain inaccurate, which is surprising that a prestigious organization would put out that kind of information."

For every piece of slanted literature against unions, there is pro-union literature pumped out by unions. Sosne says she doesn't know how much SEIU spent on trying to organize EHS nurses and techs.

"I don't have a figure. It's not like it's existing on a shelf and we won't give it to you," Sosne says. "A lot of the work was done by the employees who were not being paid, but felt strongly that this was their way to have a voice. That's typically our largest resource in a campaign."

Sosne says unions use money from union dues to finance the cost of their campaigns. "The difference [between EHS and SEIU] is this: they're using patient care dollars to fight unionization, and the irony is they are saying they're hurting, and that they don't have dollars. But they are actually spending patient dollars to fight techs and nurses."

Employees have not missed the fact that EHS announced a 9 percent pay cut in April but have spent an undisclosed amount of money on an anti-union campaign.

Lockman, the LPN at Valley Hospital, says the administration not only sent out negative materials lambasting unions and questioning employee loyalty, but tried to prevent union material from being dispersed in the hospitals.

"One of the most frustrating things was the disposal and the taking down of union literature," Lockman says. "I felt like they were infringing on people's rights to be educated and get that knowledge. I would find a whole stack of union newsletters in the garbage can. I would take them out and distribute them. I took a lot of hard work to overcome... by those who were involved in the process."

In addition, Palm claims that managers, perhaps unwittingly, misinformed employees of their rights.

"My manager told me it was illegal to talk about the union on Deaconess property, and that it was against labor laws," Palm says. "They have fought this thing so hard. They only reason they don't want to do this is because they don't want to lose control."

EHS may not want to lose control, but they really don't want to lose any more money. The real cost of a union is in attorney fees for contract negotiations and the preparation and response to labor disputes that could occur. EHS doesn't want a middleman.

But employees claim the reason they've sought a union is because EHS administration hasn't allowed them to communicate. They claim they need a middleman. As a case in point, Palm points out that suggestions made by medically trained staff regarding the purchase of medical devices and equipment are often overlooked.

"Take the penile prosthesis. There was one brand that got ordered in, and it's the kind the guys don't like, and now we have $30,000 worth of them sitting on a shelf and they have an expiration date. The purchasing department doesn't want to send it back because they don't want to pay a 20 percent restocking fee. This is just one instance," Palm says.

Remember the Patient -- Dr. Richard Beren, a former senior partner with Inland Imaging, one of the most successful radiology groups on the West Coast, has a long professional history with EHS, which ended abruptly last fall. EHS had contracted with Inland Imaging for radiology, but last November, Beren says the company fired the group without consultation.

"The long and short of it is that Inland Imaging has always been doctor-run and doctor-owned," Beren explains. "Inland Imaging had outside patients, so we weren't beholden to the hospital and could meet [administration] more equitably. My impression was that the hospital did not like that equitable arrangement.

"For example," Beren continues, "Inland Imaging started a mammography site, and the administration was very much against that because they saw that as taking business away from themselves. However, [EHS] didn't plan on opening a mammography center. But they said to us that we better not do it. It was a threatening situation."

Beren says Inland Imaging's mammography clinic is a success. He says the reasoning behind EHS's displeasure over the clinic had nothing to do with what was the best for people's health needs, but a reaction that was financially motivated. That shouldn't be so surprising, though; hospitals are businesses, not simply care centers. Many of the decisions made by both EHS and other hospitals are money-driven.

Beren explains that radiology is a huge moneymaker for hospitals, and he thinks EHS was focused on having total access to the radiology group in order to make all the profits from it.

"About the time when we joined with Sacred Heart, they thought that it wouldn't be a good idea to have somebody that's affiliated with their prime competitor, and I can't find fault in that," Beren concedes.

Beren's beef with EHS administration, like many of the nurses and techs working for the company, is that there isn't any communication.

"I was there 15 years, and we were kind of dismissed, no conversation. We were given a form letter and given 90 days," Beren says.

The gap between the medical community at the hospitals and the administrative, business-run community is large -- a problem many experts say is endemic of the entire healthcare industry. But at EHS, employees say it's gone too far.

"The importance of all this is Empire Health Services wants their own doctors and their doctors to work at their centers and refer patients to their other centers -- and they don't want anything to do with Sacred Heart," Beren says.

But, to be fair, it's important to note that all hospitals compete with each other, just as with any businesses in the same industry (see "Wing Wars," page 15).

The Inlander contacted several doctors at the Valley and Deaconess. Understandably, most doctors were reluctant to speak on the record, claiming their standing with EHS could be hindered. But a few of them noted there had been concern over decisions made by EHS administration in the past.

One doctor, Rob Golden, a urologist at Valley Hospital, disagrees: "I think [EHS administrators] have turned around considerably and are trying desperately to be more communicative," Golden says. "I truly believe their intentions are noble."

Many of the nurses and techs that disagree with the administration's actions during their union campaign say it's not all black and white.

"There are members of administration I respect immensely," Palm says. "The whole thing isn't just about administration; they didn't just lead us to our current situation. This whole thing didn't happen overnight."

Though Beren says EHS administrators often override their physicians' advice when purchasing medical equipment, to his knowledge, patient care has never been neglected, nor has the administration ever purchased substandard equipment.

"We provide excellent service," agrees Palm.

In fact, most of the employees who are fed up with their work environment are notably proud of the quality of care Deaconess and Valley Hospital provide. They say that communication problems won't undermine patient care -- but that wage cuts could.

"Deaconess wants you to believe cutting their employees' pay by 9 percent doesn't affect patient care," states Palm. "Well, that's crap. It adds a burden and it adds stress. It drove qualified, seasoned nurses out of our hospital. You have a high number of orientees. It affects [care] in so many ways."

Sosne says employees weren't the only ones hurt by the cuts.

"I have never seen a cut of this magnitude, and I've been a nurse for 32 years," she says. "The real cost is in who they've lost, who won't work there. It was not a good business decision. They should have sat down and had some productive dialogue [with employees]."

Where the Money Goes -- Hospital workers are the first to understand the current climate in healthcare -- increasingly complex and expensive. But EHS employees wonder, as they claim to see thousands of dollars' worth of unused medical equipment sit on shelves, new wings being built that duplicate services already provided in the market and undisclosed amounts of money spent to prevent them from unionizing, what the priorities are inside EHS administration.

The pay cuts were announced while an ongoing $17 million expansion project kicked into high gear at the Valley Hospital.

"The pay decrease," says Palm, "from my understanding, was in direct correlation to getting a line of credit; it was an immediate way to show they were in the black. So they could hopefully qualify for the bonds [for the expansion]."

Melone agrees with Palm, saying most employees believe that even though administration tells them expansion funds are separate from payroll, the money EHS saves from pay cuts will extend the company's credit.

In order for bond raters and financial analysts to consider a hospital financially healthy, the business must be at a 4 percent to 5 percent operating margin. Most hospitals don't meet that level right now, and EHS is currently at a negative operating margin. SEIU says a 9 percent pay cut only saves EHS $10 million a year -- not a significant amount when losses are so severe.

Sosne says, of the administration's insistence that pay cuts are unrelated to the multi-million dollar expansion, "When they say it doesn't have anything to do with each other -- in fact, it does. It all starts with one pot of money. They make a decision how to proportion that money and put it in a budget."

EHS spokeswomen Marich did comment on this point, saying "We've had employee forum after employee forum where we tried to accommodate, to educate, our employees about these changes. The opportunity was presented in written communication; we do monthly updates, we have tried."

Union spokesman Wright says the situation is clear enough. "EHS admitted that it has cash reserves of about $35 million. EHS has publicly talked about the need to protect its cash reserves to preserve its creditworthiness for underwriting of the building projects. Empire seems to be willing to invest in buildings but to overlook its workforce, which could lead to an exodus of highly skilled and highly motivated staff out of the hospitals. It creates an environment that's more difficult to recruit staff into."

Numerous hospitals in Washington and around the nation have also made pay cuts. But nurses say those cuts have been no more than two to three percent, an amount they think is more appropriate considering the economic climate.

Working Together -- Union leaders and employees at both Deaconess and the Valley Hospital are hopeful that the EHS administration will decide to come to the negotiation table.

"Regardless of what's happened in the past, we are keeping a positive approach to working together. We are hopeful we can establish a meaningful relationship," says Sosne. "They went out on a limb in the campaign feeling pretty anxious and said things that were extreme. In fact, they have an obligation to do otherwise."

Whether EHS administrators will come to terms with their employees' decision to unionize remains to be seen.

But the union isn't waiting; after nurses and techs at Valley Hospital, and techs at Deaconess, voted to form a union, SEIU got to work.

"We've already gotten started with some preliminary meetings," Wright says. "The first thing to do is build the negotiating team of employees who will actually sit at the table with management and discuss issues. The goal will be to get a large and representative team that includes people from all job classifications to make sure every group gets their point of view heard." Wright explains that the employees in the union vote on which peers will represent them.

"The problem is Empire Health Services doesn't realize by our unionizing, we aren't trying to break them or ruin them," Lockman says. "We're trying to work with them to get through this crisis."

One thing every party agrees with, however, is that a strike would be the worst possible outcome.

"I think strikes are an absolute last possible resort," says Sosne. "Ninety-nine percent of contracts in our union get settled without strikes."

Lockman agrees that employees don't want to walk out. "There has been no talk of strike with the union. I don't think it's something we're even looking at."

Melone says the union will not only help nurses and techs with EHS negotiate for their rights, but also build the quality of patient care. "We're in the trenches doing the hands-on work day in and out, and we're not being heard or getting any say in how the care is delivered. Those decisions are being made by people who don't interact with the patients. And if we don't have a voice, the patients don't have a voice."

Publication date: 05/29/03

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