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Our Take: Kaiser Permanente to resume contract negotiations this week as more strikes loom

Oct 09, 2023

Oakland, Calif.-based Kaiser Permanente made history Wednesday when an estimated 75,000 of the health system’s nurses, lab technicians, pharmacists, optometrists, therapists, support staff, and other workers went on a three-day strike — the largest strike the health care sector has seen. 

The walkout by unionized workers in California, Colorado, Oregon, and Washington (as well as workers participating in a one-day strike in Virginia and Washington, D.C.) was not unanticipated. Months of contract negotiations between management and a coalition of unions representing the workers failed to produce an agreement satisfactory to both sides. The four-year contract negotiated in 2019, before the pandemic, expired on Sept. 30. 

The Associated Press reported on Friday afternoon that no deal was in sight, but the unions said additional bargaining sessions are scheduled for Oct. 12 and 13.  The strike ended Saturday morning, as planned, but union officials warned that a “longer, stronger” strike is possible.

Among other conditions, the workers are seeking higher pay to address increases in the cost of living, a minimum hourly wage of $25, and changes to the health system’s bonus structure. 

Chronic understaffing, greatly exacerbated by the pandemic, is a root cause of the current situation. While thousands of health care workers on the front lines died in the early phases of the pandemic, countless others experienced relentless physical, psychological, and emotional stress, leading to widespread burnout. 

Myriad nurses and other health care professionals left the workforce for various reasons. Desperate, hospitals and health systems turned to staffing agencies to help them fill the gaps, paying traveling nurses and other temporary workers substantially higher wages and hefty bonuses — and in many cases leaving their own employees feeling undervalued. 

Even after the influxes of COVID-19 cases subsided, staffing shortages continued as patients who had delayed care began to seek treatment. Workers say the ongoing shortages are impeding their efforts to provide appropriate care, putting patients at risk.

The coalition of eight unions representing the striking workers is also asking Kaiser Permanente to make significant investments in training future health care workers, and to limit the “outsourcing of critical health care duties,” Reuters reported. 

Kaiser Permanente offered to raise its minimum starting wages and proposed annual wage increases, according to Reuters, but neither offer met the coalition’s specific requests. 

The health system said in an online statement it has achieved the goal of hiring “10,000 new Coalition-represented employees by year-end,” noting that it has hired more than 50,000 people in the past two years and is “not done yet.”

Caroline Lucas, executive director of the Coalition of Kaiser Permanente Unions, told NPR the health system isn’t taking into account the thousands of employees who have left the organization.

Kaiser Permanente is one of the largest nonprofit health systems in the U.S., serving approximately 13 million patients across eight states and Washington, D.C. Other health systems are watching to see how Kaiser Permanente settles its contract disputes, as those decisions could affect their own negotiations.

Dallas-based Tenet Healthcare may be especially interested in seeing how Kaiser Permanente’s next round of negotiations unfolds, as workers at 11 of Tenet’s California locations just voted to authorize a strike if ongoing negotiations centering on wages and staffing are not successful. 

The union representing Tenet’s workers is among the coalition of unions representing Kaiser Permanente’s employees. 

Tenet’s contract with its unionized workers in California expired on June 30. If no agreement is reached in the next couple of weeks, that strike could begin on Oct. 23. 

Our Take: Kaiser Permanente certainly isn’t the first health system to see its workers strike this year and likely won’t be the last, even though we’re well into October. 

In an opinion piece about the Kaiser Permanente strike, published by The New York Times on Thursday, Dr. Craig Spencer, an emergency medicine physician and associate professor at Brown University, noted that “six of the 19 work stoppages involving 1,000 or more workers recorded by the Bureau of Labor Statistics in 2023 were in health care.”

And health systems are not the only places where health care workers are resorting to picket lines to express their frustration. Pharmacists staged two rounds of walkouts at CVS locations in the Kansas City area last month to protest unsafe working conditions — including understaffing — which they say place them, their pharmacy technicians, and patients at risk. CVS apologized and promised to make changes. 

Walgreens may be in the hot seat next. CNN reported Saturday that pharmacy employees at more than 500 Walgreens stores expressed interest in participating in a planned walkout starting Oct. 9. Understaffing and reduced training hours for new technicians are among the issues they’ve cited as reasons for the walkout.  

“We’re going to do way more harm to people in 10 more years of operating like this than we would with a three-day walkout,” one pharmacist told CNN. “It’s time to try something different. Every year we get the same promises and every year we get the same Band-Aid on the problem.” 

A communications director for Walgreens said the company “understand[s] the immense pressures felt across the U.S. in retail pharmacy right now. We are engaged and listening to the concerns raised by some of our team members.” 

Pharmacy staff and workers at four Kaiser Permanente locations in Oregon and southwest Washington, represented by UFCW Local 555, initiated a 21-day strike on Oct. 1, independent of the larger Kaiser Permanente strike.

Dr. Spencer wrote in his essay for the Times that “providers commit to serving others. That so many are walking off the job in protest means the conditions are so unsustainable, there’s no option left but to take this action of last resort.” 

On top of “unmanageable patient loads,” as Dr. Spencer puts it, many medical professionals are bogged down with insurance-related administrative tasks (e.g., prior authorizations) and compliance documentation. The all-too-real possibility of workplace violence in health care settings adds another layer of stress. 

The U.S. health care system has been in need of an overhaul for well over a decade. The pandemic threatened to destroy it, and though we’ve emerged on the other side, these protests are serving their intended purpose. They’re generating greater awareness of the immense burdens medical professionals and health care workers across the board are feeling. 

Individual health systems and government agencies are funding and establishing training and education programs to address physician and nurse shortages, though it will take years for those programs to have an impact. Generative AI promises to alleviate workloads, though we don’t yet know to what extent. 

If Congress can get its act together, legislation may be passed to support better staffing ratios and provide resources for employees who are experiencing burnout, though much of that will need to occur at the state level. 

There are remedies for the many pain points health care professionals are feeling. The question is, will those remedies be applied quickly enough and at sufficient scale to stanch the flow?

What else you need to know
Viatris accepted an offer of up to approximately $2.17 billion from Paris-based Cooper Consumer Health for “substantially all” of its over-the-counter business, along with manufacturing and research and development sites in Europe. The company noted in a transaction summary that it would retain the rights to “OTC switch candidates,” such as erectile dysfunction drug Viagra (sildenafil) and allergy nasal spray Dymista (azelastine hydrochloride/fluticasone propionate), as well as select OTC products in certain markets. In the announcement, Viatris said it also signed definitive agreements to sell its active pharmaceutical ingredients business in India to IQuest Enterprises and its women’s health care portfolio to Insud Pharma and Theramex. Collectively, the deals include up to 12 facilities and reflect gross proceeds of approximately $3.37 billion. An estimated 6,100 employees will be “conveyed” in the transactions. If closing conditions are met and regulatory approvals received, all of the transactions are slated to close by mid-2024. Based in Canonsburg, Pa., Viatris was formed when Mylan merged with Pfizer’s Upjohn division in 2020.

In separate news, at Viatris’ request, the U.S. Patent and Trademark Office will hold an inter partes review to evaluate the validity of a Novo Nordisk patent for semaglutide, the active ingredient in Ozempic and Wegovy. The patent Viatris is challenging pertains to “dosage regimes,” Fierce Healthcare reported, noting that it provides market protection until 2033, according to the FDA’s Orange Book. Viatris is vying to be the first to market generic versions of the diabetes and weight loss drugs.

Minnesota’s attorney general’s office is seeking the public’s input on two proposed mergers — one between Essentia Health and Marshfield Clinic Health System, and the other between St. Luke’s Duluth and Aspirus Health — as part of its regulatory review of the mergers. Per a press release, the AG’s office will hold a community meeting for comments on Oct. 25. Both transactions involve the combination of a Minnesota-based health system with one based in Wisconsin. Essentia Health and Marshfield Clinic announced on July 27 their plans to combine and form a 25-hospital health system. St. Luke’s Duluth and Aspirus Health announced on July 12 that they intended to merge, forming a 19-hospital health system. The AG’s review of the proposed 58-hospital merger between Sioux Falls, S.D.-based Sanford Health and Minneapolis-based Fairview Health Services was instrumental in terminating that deal.

Amgen completed its $27.8 billion acquisition of Horizon Therapeutics. After announcing the proposed transaction in late 2022, the Thousand Oaks, Calif.-based biopharmaceutical company expected to close the deal by the middle of this year, but in May the Federal Trade Commission sued to stop the transaction, claiming that Amgen would be able to stifle competition for two drugs it would gain through the deal with Dublin, Ireland-based Horizon Therapeutics. Amgen settled with the FTC last month by entering into a consent order agreement, and the High Court of Ireland approved the acquisition late last week. 

More than 30 drugmakers and biotech organizations have formed a coalition called the Partnership for the U.S. Life Science Ecosystem, or PULSE. Their goal, according to a news release, is to raise awareness of the role “pro-innovation” mergers and acquisitions play in advancing new medical treatments. The coalition is pushing back against the Federal Trade Commission’s intensified scrutiny of M&A transactions, referring to it as a “flawed approach … that would undermine the dynamic ecosystem responsible for many of the world’s most innovative and important treatments.” Founding PULSE members include AbbVie, Amgen, Gilead, Merck, and Novartis, along with 25 state organizations. 

Milwaukee-based Froedtert Health will acquire Ascension Wisconsin’s 50% stake in their jointly owned health insurer, Network Health, which provides commercial and Medicare health plans. Froedtert Health said existing Network Health members would not experience any network disruptions as a result of the transaction, noting that Ascension Wisconsin will remain in-network by extending its provider agreement after the acquisition has been completed. A closing date will be set after regulators have reviewed and approved the deal, according to the announcement. Financial terms were not disclosed.

The Halifax Group, a private equity firm based in Washington, D.C., will acquire Sodexo’s Worldwide Home Care division, including Comfort Keepers, an Irvine-Calif.-based company that provides in-home care services through more than 700 locations in eight countries. Current senior management will remain with the company after the acquisition is finalized, according to the announcement. The transaction is expected to close by year-end, pending the satisfaction of customary closing conditions. Other terms were not disclosed.  

Michael Charlton has been appointed as AtlantiCare’s president and CEO. He served in both roles on an interim basis since June 1. Charlton also served as a member of the health system’s board for more than 14 years, six of them as board chair. Based in Egg Harbor Township, N.J., AtlantiCare became part of Danville, Pa.-based Geisinger in 2015, but they severed the merger in 2019. 

What we’re reading 
Making The Promise Of Value-Based Care Meaningful To Consumers. Health Affairs, 10.5.23
The Problem of Limited-Supply Agreements for Medicare Price Negotiation. JAMA, 9.15.23
Are We Seeing a Revival of Union Power? Harvard Business Review, 10.5.23

What else we’re reading 
Going Infinite: The Rise and Fall of a New Tycoon, by Michael Lewis. Until now I’ve completely ignored the Sam Bankman-Fried saga, as well as the whole crypto nonsense that’s swept the nation in recent years. I am still plugging along on Steven Pinker’s Enlightenment Now: The Case for Reason, Science, Humanism, and Progress, which I wrote about last week, but Michael Lewis is on deck.Like Malcolm Gladwell — sort of — Lewis’ gift is explaining complicated things, especially topics that otherwise would appear to be entirely uninteresting (The Fifth Risk is an homage to excellent government work), wrapped around entirely interesting characters (The Undoing Project and The Premonition). Suddenly I care about crypto, because Michael Lewis is the one telling the story.



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