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The state of unions: a look at what’s happening—and strategic implications

The role of unions in healthcare generally falls into two distinct categories. As powerful aggregators of the healthcare workforce, activated unions can significantly influence the economics and strategies of the health systems that employ them. As major healthcare purchasers, unions also have to manage their own benefits costs, including any financial fallout from labor activity within the health sector. But the true strategic import of unions as payers—and what their efforts mean for the rest of the market—is often overlooked. We’ll get into that in the second half of this post. Let’s start with the more overt, news-driving part of this topic for 2023: the increasing activation of healthcare worker unions.


Union angle #1: Unions as vehicles for healthcare worker activation


The disenchantment feedback loop


Everyone in healthcare knows that deep dissatisfaction is rampant among the healthcare workforce, especially among nurses. This actually runs counter to data we’re seeing across the workforce as a whole, where satisfaction rates are higher than they’ve been in decades. Much ink has been spilled in the last few years about the state of the nursing, so we’re just going to quickly cover the high-points that we find most telling.


Dissatisfaction is greater in 2023 than it was even in 2021. An early-2023 survey of over 18,000 nurses found that career satisfaction across a variety of measures is way down, and the share reporting that they will leave their current role or the profession entirely are up—surpassing even 2021 levels, which one might think would have been the nadir given the exhaustion of 2020 plus ongoing grind of the pandemic.


There has been a marked contraction in the size of the nursing workforce. Keeping in mind that the U.S. population is both growing and aging, it's not a good sign that the number of nurses in the US fell by almost 2% between 2020 and 2021, with reductions concentrated among younger nurses and RNs working in hospitals. What makes this decline even more notable is the fact that pre-Covid estimates had actually projected the number of nurses to increase across the same period.




The above issues have a compounding effect. A discouraged and dwindling workforce is likely to accelerate the growth of the shortage. As more colleagues leave, and are either replaced by less-experienced newcomers or not replaced at all, conditions worsen for those who’ve remained, further exacerbating frustration and burnout.


Dissatisfaction and frustration showing up in activated unions


These conditions are the foundation on which the recent spate of healthcare strikes and union activity was built. In 2022 and 2023 we’ve seen tens of thousands of healthcare workers go on strike, including the largest private-sector nurses strike in history in Minnesota. Tens of thousands more have threatened to strike, including 21,000 Kaiser Permanente nurses in northern California. Earlier this month, nearly 3,000 workers at a group of HCA hospitals in Florida voted to strike, citing “short-staffing, low-wages, and worker safety concerns”.




Big wins at the negotiating table….


A diminished workforce, ongoing demand for staffing, and effective union organizing together make for significant leverage, and unions are winning notable concessions from their employers. In the case of the threatened strike on five HCA facilities in Florida, organizers called it off late last week after securing a 15% wage increase across three years, plus other measures to boost staff retention. These outcomes are pretty much on par with what we’re seeing around the country, with most strikers achieving double-digit pay rate increases. According to the unions though, in many cases the wage increases themselves are less important than the promises to improve working conditions through measures like mandatory staffing ratios and greater workplace safety protections. We’ll be talking more about workforce satisfaction in future blog posts, but these comments give us some useful clues about why we see rates among healthcare workers moving in the opposite direction from the rest of the country: in many ways, the job just feels worse than it used to, and higher salaries aren’t enough to fix that.


and the state house


In addition to forcing policy change at the organization level, workers are pushing for change at the state and federal level. In April, Washington state’s governor signed a bill that increases oversight of hospital staffing plan compliance, mandatory breaks and overtime protection, and empowers the state to study hospital staffing further. Oregon appears to be in the final stages of passing a law that would place mandatory caps on staffing ratios for many hospital nurses and nursing assistants, while Massachusetts lawmakers recently filed a bill that would do the same. This flurry of activity follows “safe staffing” laws passed in New York in 2021 and Colorado in 2022, and represents a rapid uptake of long-standing (and until now, not much imitated) nurse-to-patient ratio requirements in California. Action has even trickled up into the halls for Congress, with Democrats in the House and Senate re-introducing a nationwide staffing ratio bill last month.


Unsurprisingly, the most ardent detractors of these bills have been hospitals and hospital associations. For example, strong opposition from the Mayo Clinic, which threatened to halt further development in the state if Minnesota went forward with its own proposed staffing bill (plus another law capping healthcare cost growth), seems to have influenced the legislature to remove the proposal from the end-of-session package it passed Tuesday night. For their part, hospitals argue that these requirements limit their ability to leverage demand-based technology to rightsize staffing, will increase the cost of care, and can restrict the number of patients they’re able to treat.


Union activity is up; membership is not


In addition to headlines about union action, we have also seen a few about unionization potentially pushing into traditionally non-unionized groups, such as medical residents. In the last year, eight resident groups have voted to join the SEIU’s resident union, up from an average of about one per year in the past.


And while we’re talking about it, we’d like to note that union activation is up not just in healthcare, but across the board. According to Cornell’s School of Industrial and Labor Relations, the number of all-industry work stoppages increased by 52% last year, and the number of workers involved in those stoppages increased by 60%.


But it’s important not to confuse “level of action” with level of unionization. Last year, the overall, cross-industry share of U.S. workers represented by a union actually fell to an all-time low of just 10.1%. Unionization among healthcare practitioner is only slightly higher, though the share is over 17% for nurses specially, and is following a similar downward trajectory.


There are a number of generally well-known factors putting downward pressure on union membership, including the movement of many traditionally unionized industries (like manufacturing) overseas, U.S. labor laws that require workers to organize on a site-by-site basis rather than as an industry default, and the proliferation of right-to-work laws in more than half of states. The case of the successful strike threat in Florida, a famous right-to-work state, proves that none of these challenges are insurmountable, but they seem to have placed a de facto ceiling on union growth. Outside of the structural pressure, there are also personal considerations that are contributing to the decline. While positive perceptions of unions are at a 60+ year high, the vast majority of non-unionized workers in 2022 have little to no interest in joining one themselves. Whether it’s because their perceived value does not justify the dues or effort, because many workers today aren’t motivated to attach their identity so closely to their chosen career as workers in the past, or because of the seeming politicization of union activities, unionization just doesn’t feel relevant to the average employee today.


Essentially, it seems unlikely that all the labor engagement we are seeing play out in the news will translate into a significantly more unionized workforce in any industry, healthcare included. But the momentum created by now-activated healthcare unions is generating meaningful results in terms of pay and quality of life, and the implications of that go beyond the workforce in question. As we’ve discussed in previous blogs, labor costs are a huge source of pressure for health systems. These double digit pay increases are going to be passed along to healthcare purchasers, with the brunt going directly to commercial payers. In the face of untenable cost growth, employers will be on the lookout for savings strategies, especially ones that keep beneficiaries out of increasingly costly hospital settings. Which bring us to the other major function of unions in healthcare…


Union angle #2: Unions as key healthcare service purchasers


For those not familiar, unions across all industries (or, more precisely, benefits pools affiliated with those unions or union coalitions) act as payers. They contract with insurers and/or directly with providers for health insurance plans that they then offer to their worker-members and families. And like any other employer, they also have to manage provider rate increases (even, of course, when those increases are due in large part to the achievements of fellow organized labor groups).


What’s particularly notable about unions as purchasers of healthcare services is that in the strategy world, they are usually touted for pushing the commercial envelope. In recent years, union have pioneered advanced primary care models, for example establishing free clinics to provide primary and specialty services to members and their beneficiaries and in one cases founding a separate entity specifically to provide near-site clinics to unionized workers. Several labor groups have also successfully implemented high-value steerage programs, including early adoption of tiered networks and second-opinion services, and regional centers of excellence programs at no cost to members. Often the industry’s instinct is to treat these groups like a bellwether for the market, giving us an early indication of where other private payers will move. The conventional wisdom states that if we see union groups pushing for certain products and value propositions, the rest of the commercial insurance market is soon to follow.


Keep in mind that unions are not your average healthcare purchaser


The idea of unions as pacesetter healthcare payers has merit; these groups often act as valuable incubators for novel benefit designs. And with costs a growing concern, we’ll no doubt continue to see them piloting forward-thinking initiatives, and to see them held up as market role models. But it’s also important to be aware of some key nuances before assuming that as go union benefits, so go the rest of employers.


First, as we’ve noted, the actual share of the U.S. population represented by unions, and therefore accessing union benefits, is going down. And scale is important for most innovative payer initiatives—reach out about our employer research if you want some more detail on that concept.


Second, and even more importantly, the incentive structure of unions is inherently different from that of the average employer. Think about the largest unions in the country: public employees (including police and firefighters), education workers and teachers, nurses and healthcare workers, truck drivers etc. What do all these groups have in common? Typically, people join that industry at a fairly young age and remain until retirement. Just as important to note: in many cases, even if an individual changes their specific employer, they and their dependents stay affiliated with the same benefits pool.


This ‘cradle to grave’ feature of the unionized workforce will tend to skew investment in the direction of particular kinds of healthcare programming, most notably, value-based care (VBC). This is because, at its core, the promise of VBC is that upfront investment now—such as in population health management and primary care—will pay dividends in the form of averted spending in the future. Due to churn, the same principles just don’t apply to your typical employer. As of 2022, the average worker stayed with their current employer for just over four years, usually not long enough for their employer to reap the benefits of an upstream intervention.


The guiding motivations of unions are actually in many ways more closely aligned to Medicare and Medicaid than to Amazon or Walmart. While the demographic differences between Medicare/Medicaid and unionized workers and their dependents are obvious, the underlying economic principle is the same: we’re probably going to be paying for this person’s care for a long time, what can we do now that will save us some money down the road? Programming related to provider integration, primary care advances, and upstream preventive intervention are just a few that come to mind.

The bottom-line: when union-affiliated purchasers invest in innovative benefits, it’s worth paying attention. But it’s also worth thinking about who this innovation is applicable to. Conventional wisdom places unions strictly in the category of “commercial bellwether,” and in some cases that label makes sense. But in many other instances, the actions taken by union payers are much more indicative of the future toolbox available to CMS, Medicare Advantage plans, and Medicaid MCOs. The answers are rarely black and white, but considering time-horizons can be a valuable metric to use as a starting point. And if you get stumped, you know how to reach us…


About Union


Union is a researcher-founded insight company. We understand the history, incentives, and forces that drive the healthcare industry. We also have a passion for learning and teaching others about how it all works. Want to talk shop? Reach out at info@unionhealthcareinsight.com

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