Haunted by US Healthcare Inc - $27.9 Million/Year Aetna CEO Threatened Obamacare Pullback in Apparent Retaliation for Government Anti-Trust Litigation

We do not write about health insurance and managed care as much as we used to.  Dysfunction in this area now gets much media attention.  US Physicians frequently complain that bureaucratic impediments imposed on them by health insurance and the government  are major causes of health care dysfunction. 

However, managed care was at the sharp edge of the movement to change the focus of health care from individual patients cared for by individual professionals and at local hospitals, to an (unregulated) business dominated by huge corporate entities.  The wedge with that sharp edge has now driven very deep.  So it may be instructive to look at what is going on now.

The Proposed Aetna-Humana Merger

In 2015, the big news in the US health insurance sphere were big mergers.  One example was the proposed merger between Aetna and Humana.  An Aetna press release trumpeted that the

Combined Entity ... [would] Drive Consumer-Focused, High-Value Health Care

That it would have the

Ability to Lead Effort to Transform Health Care Delivery to a More Consumer-Focused Marketplace

And that it will

Improve Affordability, Quality and Convenience for Consumers

What could possibly go wrong?

Up to now, mergers that created ever bigger drug/ device/ biotechnology companies, hospital systems, and health insurance companies got little US government opposition.  After all, the fashion among health care managers and health policy experts as been to extoll all the efficiences and advantages large organizations could provide, usually absent much evidence in support of this contention. (See, for example, the press release above, and see what we have written about concentration of power.)

The Government Wakes Up to the Anti-Trust Issue

But this time, the government eventually indicated it might push back.  In July, 2016, as reported by the NY Times,

United States Attorney General Loretta E. Lynch announced that the government had filed lawsuits to block the deals, between Aetna and Humana and Anthem and Cigna.

The proposed mergers, she said, 'would leave much of the multitrillion-dollar health insurance industry in the hands of three mammoth insurance companies.'

'If these mergers were to take place, the competition among insurers that has pushed them to provide lower premiums, higher-quality care and better benefits would be eliminated,' she said.

The companies responded by vowing, in varying degrees, to fight the government’s challenge. Aetna, which had hoped to gain an advantage by being the first to reach a deal, aggressively defended its proposed merger, which it contended was different from the larger Anthem-Cigna deal that followed.

'I like my chances in front of a judge,' Mark T. Bertolini, chief executive of Aetna, said in an interview.

 Parenthetically, I wonder what evidence she had that previous competition had led to "lower premiums, higher-quality care and better benefits" up to now, but I digress.

Aetna Suddenly Abandons ACA Exchanges

Soon after that, Aetna announced it was pulling out of the "markets" created by Obamacare, aka the Affordable Care Act (ACA), e.g., per CNBC.

Aetna is sharply cutting its participation in Obamacare exchanges for 2017.

The health insurer said it will offer individual Affordable Care Act exchange plans in just four states, down from 15 this year, in an effort to reduce its losses.

'As a strong supporter of public exchanges as a means to meet the needs of the uninsured, we regret having to make this decision,; Chairman and CEO Marc Bertolini said in a statement.

This despite the fact that

as recently as April, Aetna's Bertolini had expressed strong support for the exchanges, telling analysts that it would have cost the company more than a $1 billion to acquire the million new customers it had signed up on Obamacare exchanges.

Cut to Michael Hiltzik writing for the Los Angeles Times. As he noted,

Aetna’s announcement this week that it was pulling out of most of the states where it was serving the Obamacare individual exchanges was a head-scratcher; after all, just three months earlier, Chief Executive Mark Bertolini was calling its participation in the market 'a good investment,' despite near-term losses.

Bertolini also had tried to tamp down speculation that its withdrawal was anything like a payback for the government’s move to block its $37-billion merger with Humana. That was 'a separate conversation' from its evaluation of the exchange business, he said during an Aug. 2 conference call with Wall Street analysts.

However,

Now evidence has emerged that Aetna was lying. The smoking gun is a July 5 letter from Bertolini to Ryan Kantor of the Justice Department, unearthed by Jonathan Cohn and Jeffrey Young of the Huffington Post via a Freedom of Information Act request. In the letter, sent before the DOJ formally announced it would sue to block the Humana deal, Bertolini explicitly ties the two issues together.

'Our analysis to date makes clear that if the deal were challenged and/or blocked we would need to take immediate actions to mitigate public exchange and ACA small group losses,' Bertolini wrote. 'Specifically, if the DOJ sues to enjoin the transaction, we will immediately take action to reduce our 2017 exchange footprint. We currently plan, as part of our strategy following the acquisition, to expand from 15 states in 2016 to 20 states in 2017. However, if we are in the midst of litigation over the Humana transaction, given the risks described above, we will not be able to expand to the five additional states.'

So to review, Aetna and Humana, already large for-profit managed care organizations/ health care insurance companies announced a merger, proclaiming it was all about better, higher value care for patients .  The government begged to differ.  Aetna suddenly announced its retreat from government backed insurance markets.  Its CEO denied that move was retaliation, but was allegedly "lying."

Why am I not surprised by Aetna's apparent untrustworthiness?

The History of US Healthcare Inc

As we just discussed, many large health care organizations are the products of mergers, acquisitions, and other kinds of financial engineering.  This makes their corporate history and culture much harder to comprehend.

In particular, let us not forget that the current Aetna is a product of the merger of US Healthcare Inc and Aetna in 1996.  Many readers may not remember much about this merger, and it may have occurred before others' time.

Promises of Wonders to Come

In short, US Healthcare Inc was one of the earliest for-proft managed care companies.  A 1996 Philadelphia Inquirer story described its origin.  It was started by Leonard Abramson, based on work done in the early 1970s. 

By the early 1970s, Abramson had shifted gears and gone to work for R.H. Medical Inc., a small but innovative hospital-management company then headquartered in Cheltenham.

Abramson held the title of vice president for corporate development. But even colleagues didn't know what that meant. `Nobody knew him,' one former R.H. Medical executive says. 'He was running some project nobody knew anything about.'

The project Abramson was running turned out to be a prototype of the health maintenance organization a prototype of the health maintenance organization: a new form of health plan that turned a la carte medicine on its head by paying doctors and hospitals set, all-inclusive fees for their services, instead of paying each and every time they treated a patient.

The idea was to change the incentives from doing more to doing only what was appropriate and kept the patient healthy, Abramson once said. In short, it was a lower-cost alternative to the inflationary fee-for-service medicine then in vogue.

Managed care has been promising lower costs for patients and society, better access, and higher quality for a long time.  Yet, there was never any good evidence that it ever really was "a low-cost alternative" for patients, and while it helped enable the decline of fee-for-service medicine, its alternative was not obviously less "inflationary."

Making the Insiders Rich


On the other hand,  US Healthcare Inc was good at extracting a large amount of money from the health care system to benefit its founder and CEO, and his family tremendously wealthy. Again per the Inquirer in 1996,

Abramson's 1993 salary of $3.52 million, based on a 40-hour week, worked out to $1,692.30 an hour. That's not including his $6.3 million in stock options.  [That would be total compensation of at least $9.82 million in 1993.]

A 1995 proxy listed Abramson's 1994 base salary at $1.8 million, plus a bonus of $1.6 million.

Forbes magazine estimated his 1994 worth at $780 million, making him No. 110 among the 400 richest people in America. He was ranked that year as the Philadelphia area's highest paid CEO of a publicly traded company.

In addition,

He's made sure his children haven't had to struggle. A proxy report showed U.S. Healthcare paid daughter Nancy Wolfson $239,999 in salary and bonuses in 1993, and her husband, Richard, who directs the pharmacy and dental operations, $270,000. Another daughter, Marcy A. Shoemaker, made $280,000.

Company shares also are held in trust for Abramson's grandchildren.

Angry Doctors and Allegations of Worse Care

While the company provided monetary advantages to its insiders, but not clearly to patients or society, I remember US Healthcare Inc from my days as a fellow and then junior faculty member in the Philadelphia area as rather a nasty player.  At the time of the 1996 merger, a Philadelphia Inquirer story about the CEO of US Healthcare Inc stated

U.S. Healthcare is considered one of the nation's toughest HMOs....

And retold

a joke making the rounds in Philadelphia-area doctors' lounges:

[US Healthcare CEO Leonard] Abramson dies and goes to heaven, where he compliments God on what a great place he has. 'Don't get too comfortable,' God advises. 'You're only approved for a three-day stay.'

The Philadelphia Inquirer separately described Mr Abramson thus:

to his detractors in the health-care industry, Abramson is anything but charitable. They view him as a ruthless, bottom-line-oriented executive who has made himself and his Blue Bell company fabulously wealthy while ratcheting down payments to hospitals and skimping on patient care.

For years, some of the most prestigious hospitals in Philadelphia refused to sign contracts with U.S. Healthcare. Those that did often complained bitterly about the hard-line negotiating style of Abramson and his colleagues, which resulted in lower reimbursement rates for the hospitals.

The story concluded,

 Abramson continues to receive heavy criticism from some in the health-care industry. These critics say his HMOs have stressed profits and shareholder value over quality patient care.

So US Healthcare Inc was one of the first important US for-profit managed care organization.  It promised lower costs for patients and society, and better health care.  While there is no evidence these promises were fulfilled, it made its top insiders very wealthy, while alienating health care professionals, many who thought it led to worse health care for their patients.

This pattern repeated when Aetna merged with US Healthcare.

The Aetna - US Healthcare Merger

 Promises of Wonders to Come

When the merger between Aetna and US Healthcare Inc was proposed, according to the Philadelphia Inquirer in 1996,

The deal would put the new company in a position 'to redefine the way in which medical care is delivered in the country,' said Aetna chairman Ronald E. Compton, who would serve as the combined firm's chief executive. 'U.S. Healthcare was the best possible partner for Aetna. . . . This is, no kidding, a once-in-a-lifetime opportunity to create a model for exceptional' health care.

Yet in retrospect there is no evidence that the merger produced "exceptional health care," at least not exceptional in terms of being exceptionally good for patients.

Making the Insiders Rich

But like the old US Healthcare Inc, Aetna did succeed in making its CEOs very wealthy.  In 2012, we noted that the first new CEO of the combined entity, Dr John Rowe, was to get an initial salary of $1 million and bonuses of $1 to $3 million to start in 2000.  And by 2010, as we posted here, according to its 2010 proxy statement, Aetna CEO Ronald A Williams' total compensation in 2009 was a mere $18,058,162. Other top executives made proportionate amounts, from more than $1 million to more than $12 million.

In 2015, as noted by the Hartford Courant,

Aetna Chairman and CEO Mark Bertolini received $27.9 million in compensation last year, according to a filing Friday with the Securities and Exchange Commission.

About $24.8 million of the package was due to gains in value on restricted stock that vested in 2015 and on stock options he was awarded 10 years ago and exercised in 2015.

The total was up from $15 million in 2014.

His compensation also included $1,034,483 in salary, $1.84 million in cash bonus, and $271,908 in perks, mostly from the cost of his using the corporate aircraft for personal use.

Angry Doctors and Allegations of Worse Care


Also, once Aetna and US Healthcare Inc merged, Aetna acquired a bad reputation among physicians.  As we wrote in 2012, by 1998, an American Medical News article documented the "rocky relations" between Aetna and physicians. By early 2000, Aetna CEO Richard Huber was known as "the managed care executive physicians love to hate," per the American Medical News. His departure was characterized by then American Medical News Street Smarts columnist Dr Scott Gottlieb, as partly due to how

Huber talked out of one side of his mouth about his company's obsessive quest for 'quality' health care -- while out of the other he was screaming at doctors, hospitals and drug firms about controlling costs. Yet Aetna's medical costs were still creeping up. As Richard Huber learned, you can't talk the talk if you don't walk the walk.

So once again, after US Healthcare merged with Aetna, the combined, larger company did not deliver on promises of lower-cost, higher-quality care, while it made its insiders very wealth, angered health care professionals, and allegedly led to poor health care.


Conclusion

So the story of US Healthcare Inc, and its merger with Aetna showed a repeating pattern: unfulfilled promises of wonders to come, angry health professionals complaining of bad health care, while the corporate insiders become rich.  So do we really think that the proposed Aetna Humana merger would "Drive Consumer-Focused, High-Value Health Care?"  If so, could I sell you a bridge from Brooklyn to Manhattan?

This case shows how we have turned health insurance over to large for-profit corporations, in an era of laissez faire capitalism and light touch regulation, and in an era in which managerialism enables the leadership of health care organizations by business trained people with little understanding of or sympathy for the health care calling, but who can get rich by pursuing short-term revenue, and can deploy armies of marketers and public relations specialists to obfuscate what is going on.

Why on earth should we expect by continuing in the same direction we will now actually produce lower-cost, higher-quality care?

One big problem is that many people in the US now think of commercialized health care as the norm, and cannot conceive of any alternatives.  Even our recent attempt at health care reform, the Affordable Care act, depended on the continued dominance of health insurance by for-profit corporations.

True health care reform would consider alternatives.  At least we could start with much tougher regulation of commercial health care.  For example, in his article noted above, Michael Hiltzik suggested

We’ve mentioned before that the government isn’t entirely powerless to goad big insurers like Aetna into greater participation in the ACA exchanges. Among other things, the companies make money hand over fist by serving Medicaid expansions in many states and in Medicare managed-care plans. Why not tie their access to those lucrative markets to sticking with the exchanges until they’re finally stabilized?

Bertolini implicitly tied Aetna’s participation in Obamacare to a green light from the government on the Humana merger. But two can play that game.

That would not go over well with neoliberals who believe all corporate regulation is bad.

Furthermore, mabye we should reconsider whether most, or any health insurance should be provided by for-profit corporations. The "government option" is no longer a taboo topic in conversations about "Obamacare." There are other options. Other countries rely on tightly regulated, accountable non-profit organizations to provide health insurance. Such organizations may not enrich insiders as well as big for-profit health insurance companies, but maybe for once we should think of putting patients' and the public's health ahead of these insiders' enrichment.

Not Going to Take it Anymore - Doctors in the Pacific Northwest Unionize, Begin Collective Bargaining with Hospital Systems

We have posted about the plight of the corporate physician.  In the US, home of the most commercialized health care system among developed countries, physicians increasingly practice as employees of large organizations, usually hospitals and hospital systems, sometimes for-profit.  The leaders of such systems meanwhile are now often generic managers, people trained as managers without specific training or experience in medicine or health care, and "managerialists" who apply generic management theory and dogma to medicine and health care just as it might be applied to building widgets or selling soap.

We have also frequently posted about what we have called generic management, the manager's coup d'etat, and mission-hostile management.  Managerialism wraps these concepts up into a single package.  The idea is that all organizations, including health care organizations, ought to be run people with generic management training and background, not necessarily by people with specific backgrounds or training in the organizations' areas of operation.  Thus, for example, hospitals ought to be run by MBAs, not doctors, nurses, or public health experts.  Furthermore, all organizations ought to be run according to the same basic principles of business management.  These principles in turn ought to be based on current neoliberal dogma, with the prime directive that short-term revenue is the primary goal.

Now there are a few signs that the physicians are getting fed up with having to answer to generic management and managerialism.

I found two stories, perhaps somewhat related, about physicians unionizing to stand up to their new often managerialist overseers.  The most prominent was in the New York Times on January 9, 2016, provocatively titled "Doctors Unionize to Resist the Medical Machine."  It tells the story of how the hospitalists at PeaceHealth Sacred Heart Medical Center in Springfield, Oregon, formed a union de novo.  The second started with a brief article in the Seattle Times on December 27, 2015, about how housestaff at the University of Washington (UW) revived a housestaff association and turned it into a union.

Managerialism as the Stimulus at PeaceHealth

The long article about PeaceHealth showed that managerialist leadership of the hospital system was the chief stimulus for unionization. 

Managerialist Tactics: Outsourcing

The NYT article opened with

in the spring of 2014, when the administration announced it would seek bids to outsource its 36 hospitalists, the hospital doctors who supervise patients’ care, to a management company that would become their employer.

The outsourcing of hospitalists became relatively common in the last decade, driven by a combination of factors. There is the obvious hunger for efficiency gains. But there is also growing pressure on hospitals to measure quality and keep people healthy after they are discharged. This can be a complicated data collection and management challenge that many hospitals, especially smaller ones, are not set up for and that some outsourcing companies excel in.

Outsourcing is a now familiar entry in the managerialists' playbook.  It is seen more in manufacturing than in health care.  Although touted as improving economic "efficiency," it also may reduce the accountability of the managers of the organization that does the outsourcing.

Pursuit of Economic Efficiency

In this case,

Outsourced hospitalists tend to make as much or more money than those that hospitals employ directly, typically in excess of $200,000 a year. But the catch is that their compensation is often tied more directly to the number of patients they see in a day — which the hospitalists at Sacred Heart worried could be as many as 18 or 20, versus the 15 that they and many other hospitalists contend should be the maximum.

It was the idea that they could end up seeing more patients that prompted outrage among the hospitalists at Sacred Heart, which has two facilities in the area, with a total of nearly 450 beds. 'We’re doctors, we’re professionals,' Dr. [Rajeev] Alexander said. 'Giving me a bonus for seeing two more patients — I’m not sure I should be doing that. It’s not safe.' (A hospital representative said patient safety was 'inviolate.')

A constant theme of managerialism, and the neoliberalism that underlies it, is economic efficiency.  The usual narrative is that efficiency means providing better goods and services at lower costs. Instead, managerialism and neliberalism may mean decontenting goods and services so as to lower costs to the organizations providing them, but not necessarily providing more value to consumers.  In health care terms, managerialism and neliberalism may lead to less accessible, more mediocre health care that increase revenue to the organizations providing it, as implied by the physicians' comments above.  Making the US the most commercialized, managerialist run, and arguably neoliberal health care system among the developed countries has not led to lower costs, better access, or better health care quality.


The backstory for the outsourcing emphasizes that managerialism, and the resulting economic efficiency was indeed the goal of PeaceHealth...

In 2012, Sacred Heart’s parent, PeaceHealth, a nonprofit health care system, installed an executive named John Hill to adapt its Oregon hospitals to the latest trends in health care. Mr. Hill, in an effort to rein in the budget and improve the efficiency of a hospital that administrators said was lagging in key respects, including how long the typical patient stayed, eventually concluded that the hospitalists at Sacred Heart should be outsourced.

Centralization of Control

Furthermore,

The hospitalists also chafe at the way the administration has tried to centralize decisions they used to make for themselves. This might include hiring fellow doctors or the order in which they see patients on any day. They also complain of being loaded down with administrative tasks.

'We’re trained to be leaders, but they treat us like assembly line workers,' said Dr. Brittany Ellison, a hospitalist in the group. 'You need that time with the patient,...'

A major feature of managerialism is the concentration of power within (generic) management. To quote Komesaroff(1),

In the workplace, the authority of management is intensified, and behaviour that previously might have been regarded as bullying becomes accepted good practice. The autonomous discretion of the professional is undermined, and cuts in staff and increases in caseload occur without democratic consultation of staff.   Loyal long-term staff are dismissed and often humiliated, and rigorous monitoring of the performance of the remaining employees focuses on narrowly defined criteria relating to attainment of financial targets, efficiency and effectiveness.

We're Only In It for the Money

Also, the negotiations that started once the PeaceHealth physicians formed their union demonstrated a central tenet of managerialism

Even starker than the divide over these questions are the differences in worldview represented on opposite sides of the table. During a bargaining session last fall, the administration proposed increasing the number of shifts a year. Hospitalists now earn about $223,000 a year for 173 shifts and are paid extra for working more. The hospital offered $260,000 for a mandatory 182 shifts, and up to $20,000 in bonus pay for hitting certain medical performance targets. The hospitalists work seven days on and seven days off, so this would have effectively eliminated any time off for sick days or vacation.

When the doctors pointed this out, the administration responded that if they missed a few days, it would make sure they got extra days to hit the required number of shifts for full pay.

The hospitalists assured the administration negotiators that their concern had nothing to do with money — that none of this had ever been about money. They preferred to work less and make less to avoid burnout, which was bad for them and worse for patients. At which point the administration responded that money was always the issue, according to several people in the room. (The hospital declined to comment.)

Suddenly it dawned on the doctors why they had failed to break through, Dr. Alexander said. 'Imagine Mr. Burns,' the cartoonishly evil capitalist from 'The Simpsons,' 'sitting across the table,' he said. 'There’s no way we can say, 'This isn’t what we’re talking about. We’re not trying to get the bonus.''

Again, managerialism is based on neoliberalism, and neoliberal view is that the market rules.  The market is the arbiter of success, and money is the only outcome that matters.  As Komesaroff put it(1),

The particular system of beliefs and practices defining the roles and powers of managers in our present context is what is referred to as managerialism. This is defined by two basic tenets: (i) that all social organisations must conform to a single structure; and (ii) that the sole regulatory principle is the market.

Mission-Hostile Management

Never mind that the centrality of money seems entirely inconsistent with the stated mission of PeaceHealth,

We carry on the healing mission of Jesus Christ by promoting personal and community health, relieving pain and suffering, and treating each person in a loving and caring way.

Ostensibly, this is accompanied by core values, such as,

Stewardship We choose to serve the community and hold ourselves accountable to exercise ethical and responsible stewardship in the allocation and utilization of human, financial, and environmental resources. and,

Social Justice
We build and evaluate the structures of our organization and those of society to promote the just distribution of health care resources. 

We have frequently discussed how leadership of contemporary health care organizations often seem to act contrary to the organizations' stated mission, that is, mission-hostile management.

Value Extraction

Finally, while managerialism is ostensibly concerned with economic efficiency, whose efficiency matters.  When managers address physicians' efficiency, they seem to look at amount of work done divided by the cost to the hospital of paying physicians. However, they never seem to look at their own costs, the costs of management, as being a negative.

The PeaceHealth 2014 form 990, the latest available, states that the then CEO, Mr Alan Yordy (whose highest academic degree was an MBA, according to his LinkedIn page) had total compensation in 2013 of $1,366,742, and 11 other managers had total compensation greater than $250,000, with 9 having total compensation greater than $500,000. Those figures should be compared to the highest compensation offered the hospitalists, a maximum of $280,000 for 182 shifts a year, eliminating all vacation and sick leave. So if it is all about the money, the managers are making the most of it.

We have discussed ad nauseum the ridiculous compensation of the leaders of health care organization, even non-profit organizations.  Value extraction by top management has become a central feature of the US and global economy (look here).

The NYT article did not discuss whether the upset hospitalists knew about their bosses' compensation.  I suspect they did.  

Forming a Functioning Union at the University of Washington

The media coverage of the UW housestaff unionization was less detailed.  It does appear, though, that a stimulus was the pursuit of economic efficiency by UW management through squeezing the pay of housestaff, as described in the December article in the Seattle Times. In it the house staff said,

they account for about one-fifth of King County’s doctors and they want higher pay, new child-care benefits and free parking. Some UW residents and fellows earn so little that they qualify for welfare programs like Temporary Assistance for Needy Families and the Seattle City Light Utility Discount Program, according to the UWHA [University of Washington Housestaff Association.]

Another article in early January, 2016 in the Seattle Times added,

The association has proposed that residents and fellows earn at least the same salary as the UW’s lowest-paid physician assistants. Because the doctors in training work very long hours, they sometimes earn less than Seattle’s minimum hourly wage, the UWHA has said.

The council members, in their letter to Cauce, called the situation shocking. And based on information from the UWHA, they wrote that some residents and fellows qualify for welfare programs like Temporary Assistance for Needy Families (TANF).

The Seattle articles noted that the UW housestaff may earn from just over $53,000 to just under $70,000 a year.  Keep in mind, however, that under current rules, house staff may work up to 80 hours a week.  So $53,000 for someone working those hours translates into $13.25/ hour, under what many people now claim is the living wage.  That could be considered exploitation of  workers with doctoral degrees working in often highly stressful situations where lives may be on the line.  Whether there were issues other than money (and the respect it implies) involved at UW was not apparent based on the minimal press coverage.

So it appeared that the hospitalist physicians working for PeaceHealth, and most likely the housestaff of the University of Washington were pushed to unionize to counteract the managerialism of their hospital leaders.

The Results of Unionization So Far


In my humble opinion, similar stories to those at the PeaceHealth hospital about managers pushing physicians to increase productivity and efficiency, seemingly with little regard for the effect that might have on patient care and physicians' professionalism can be found at many hospitals and health systems.  Housestaff may be paid at little more than minimum wage rates at many training institutions.  However, employed physicians have rarely effectively resisted up to now. Perhaps one reason is that at many institutions, each employed physician has his or her own contract, and may feel little power to negotiate his or her working conditions independently.  Housestaff physicians obviously might feel they have even less leverage.  But at PeaceHealth Sacred Heart, the physicians had other ideas:

Amid the groaning, a relatively new member of the group named Dr. David Schwartz observed, 'They can’t fire all of us — there are unions.' This was a bit of a stretch: While there are hospitals around the country whose doctors are unionized, there did not appear to be a union anywhere composed of a single group of specialists. But Dr. Schwartz, a barrel-chested man with close-cropped hair and a bushy beard who would not look out of place at a graduate English seminar, thought unionizing might be worth a try.

At the time, it was only one of several options the doctors considered. They talked of forming an independent hospitalists group, of forming an alliance with an outsourcing firm of their choosing. But the alternatives gradually fell away for a variety of practical reasons, and the doctors were growing increasingly bitter.

Dr. Littell developed a riff, which the other hospitalists appropriated, about how the situation was like having your spouse of several decades announce he or she was going to play the field. 'You’ve been great, you’ve always been there,' he would joke. 'I just heard there could be better spouses out there.' The kicker: 'The good news is, you’re in the running, too!'

Amazingly, the unionization at PeaceHealth Sacred Heart was at least partially successful,

By March 2015, the PeaceHealth leadership, whatever its interest in efficiency gains, was apparently not pleased that one of its hospitals had a white-collar labor insurrection on its hands. The company announced that it would not outsource the hospitalists, a move it later said was always a possibility. Mr. Hill, who declined to comment, left in May.

The union did defeat the outsourcing tactic.  But otherwise results have not been so quick to appear, 

Noting that the negotiations with the hospital administration have dragged on for roughly a year, Dr. Schwartz said, 'It’s pretty obvious that they don’t want to get a contract done.' He says the administration worries that if it essentially rewards the hospitalists with a contract, it encourages other hospital workers to unionize too.

The housestaff at UW used a slightly different set of tactics, but still managed to form a real union.  Per the earlier Seattle Times article,

Established in 1964, the UWHA was mostly dormant during the 1980s and 1990s, according to the association’s website. It became active again starting in 1999. In 2013, members proposed making it a state-recognized collective-bargaining unit.

The UW petitioned the state Public Employment Relations Commissionto block the move, arguing that the residents and fellows were students paid stipends rather than employees paid salaries. But the commission sided with the residents and fellows, who last year voted to unionize.

The housestaff association has succeeded in negotiating. But as did the PeaceHealth doctors, they have not yet been able to secure their positions, per the later article.

University of Washington brass say they’re committed to providing the UW’s medical residents and fellows with decent compensation and benefits, but they insist the newly unionized doctors in training are asking too much in contract negotiations.

So,

Talks have been stalled for some time but are set to resume this month with a mediator assigned by the state Public Employment Relations Commission.

The two sides 'remain far apart in the area of compensation,' Joyner wrote in his letter.

Parenthetically, unexplored in any of the press coverage is whether the parallels between what is going on at PeaceHealth and the University of Washington have to do with explicit ties between the organizations. In 2013, per Beckers' Hospital Review, the news broke that the two institutions signed a letter of intent to create a "strategic alliance." In 2014, an article in the Seattle Times noted the ongoing concerns of housestaff and students at UW that the alliance could be diminishing their educational opportunities.

Summary

In one sense, it is amazing that physicians are now starting to unionize as a response to the managerialism of their leaders.  It was not all that long ago when the majority of physicians worked as solo practitioners or in small group practices, and fiercely defended their autonomy.  The last thing they would have thought about was unionization.  Since physicians were their own bosses, with whom could their unions have negotiated?  In addition, in the US, independent physicians and physician practices could not legally unionize.  Practices that discussed such issues as fees were liable to anti-trust prosecution.  And with what bosses could they have conceivably negotiated.

Yet now physicians are increasingly corporate employees, hence corporate physicians. At the moment, unionizing may be one of the few effective tactics health care professionals can use to halt the march of managerialism/ generic management and partially relieve the plight of the corporate physician (and health care professional.) However, in the long run, as long as people who care more about money than about patients' and the public's health run health care, even unions will not be able to make that much progress, and not without adverse effects.

It would take true health care reform to address the larger problems with health care and society that is now leading to physicians unionizing.  In  my humble opinion, hospitals, health care systems, and other "provider organizations" should seek better patient care, not growth.  Should they not voluntarily downsize (an almost comical idea in the current context), anti-trust enforcement, and probably new legislation would be needed to stop their pursuit of market dominance and return them to responsible community organizations.  The now much smaller hospitals, and provider organizations should not be run for profit, and the commercial practice of medicine should again be illegal.  Most physicians should go back to being private practitioners as individuals or within small groups.  Leaders of hospitals and provider organizations should be accountable for putting patients' and the public's health first, upholding professional values, and should not expect to get rich doing so.  But I dream on....

Musical Interlude

To lighten things up, if only a little, here is the YouTube video version of the full third album by the Mothers of Invention, led by the incomparable Frank Zappa, "We're Only In It for the Money."



ADDENDUM (21 January, 2016) - This post was republished on the Naked Capitalism blog.


Reference

1.  Komesaroff PA, Kerridge IH, Isaacs D, Brooks PM.  The scourge of managerialism and the Royal Australasian College of Physicians.  Med J Aust 2015; 202: 519- 521.  Link here.