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Mar 3, 2014

By Gregory A. Brown

Recently, on opposite coasts, health care union have been pressing voter ballot initiatives to win concessions from hospitals and other health care institutions that the unions have been unable to successfully negotiate.

For example, in November 2013 the Service Employees International Union-United Healthcare Workers West filed two ballot initiatives in California.

The first initiative seeks to limit the total compensation (salary plus bonus, pension, etc., excluding health and disability insurance) of non-profit hospital/health systems executives to $450,000 per year. The second initiative would cap the amount that both for-profit and non-profit, but not children’s, hospitals could charge its patients to 25 percent above the cost of services or items rendered to the patients.

A new weapon against employers

The second initiative would also cap revenues on an annual basis at 25 percent above cost for every payer. Retroactive recoupment payments from hospitals would be required for each patient where revenue (usually from a third-party payer) exceeded 25 percent above cost.

In Massachusetts  last December, the Massachusetts Nurses Association filed petitions aimed at getting two ballot initiatives in front of voters.

The first of these initiatives seeks to impose hard staffing ratios in all Massachusetts Hospitals, something the MNA has been trying to achieve both at the bargaining and through the legislature for some time. The second initiative, which is similar to the California initiatives, would require hospitals and other covered facilities to disclose all their financial assets held within and without the U.S., limit CEO total compensation (defined as salary, bonus, and benefits) to 100 times that of the hospital’s lowest paid employee, and limit hospital profits to 8 percent above operating margin and claw back any profits in excess of that limit.

These ballot initiatives represent unions’ attempts to wield a new weapon against employers. Unable to secure what they want during negotiations with individual hospitals, or through traditional avenues of legislation, unions are waging a new type of campaign in the public sphere. While akin to a corporate campaign, the unions’ ballot initiative efforts reach farther; they target an entire industry.

The consequences of these initiatives could be devastating.

The practical implications of initiatives

Hospitals and other institutions are concerned with the practical implications of these initiatives. The Hospital Association of Southern California reports that if the pricing/revenue initiative passes, it will cause private (for-profit and non-profit) hospitals to lose up to $12 billion annually in current revenues – a nearly 20 percent cut in annual net patient revenue.

Such a substantial loss of revenue could result in the loss of thousands of jobs, reductions in or restrictions on hospital services, hospital closures, and other significant economic consequences not just for the hospitals, but for the public as well. The similar Massachusetts initiative would likely have a similar impact.

It remains to be seen whether anything will come of these ballot initiatives, but the threat is real.

Hospitals and other health care institutions will have to enter the PR ring to educate the public on the true aims and costs of these measures. The California Hospital Association has already launched its own counter-initiative website,

If left unchecked, unions’ efforts to put pressure on hospitals and other health care institutions through ballot initiatives could have serious detrimental effects on the quality of, and access to, health care.

This was originally published on Littler Mendelson’s Healthcare Employment Counsel blog. © 2014 Littler Mendelson. All Rights Reserved. Littler®, Employment & Labor Law Solutions Worldwide® and ASAP® are registered trademarks of Littler Mendelson, P.C.