Unionization of professional clinicians in America’s Hospital Corporations
Preamble: How has it happened that a hospital medical staff sought unionization? Has the nature of hospitals changed? If so, why?
These unprecedented questions were the subject of a historic MPPA meeting [1] Oct 17, 2024. To seek answers the meeting gathered experts in medical law, economics and professional ethics. The grievances of the medical staff clinicians were heard first. Hearing their plight made it obvious that the nature of hospitals had changed. Hospitals, once community institutions with an independent medical staff, have become mini-insurance corporations servicing the medical care of large populations on fixed budgets dictated by others. Are they not thus forced to ration care to survive financially? How did this happen?
These questions are explored in these meeting minutes.
Unionization of professional clinicians in America’s Hospital Corporations
MPPA Zoom meeting minutes Oct. 17, 2024, Thursday 7-9 PM
[Note: my comments are few and in brackets—rwg.]
Present:
Lisa Schweiger MD, Nick VenOsdel MD, John Diehl JD, David Feinwachs JD, PhD, Prof. Stephan Parente PhD (UMN Carlson school of management), Prof. Robert G. Kennedy PhD (St. Thomas U), Robert Koshnick MD, Robert W. Geist MD, Paul Schanfield MD, John Wust MD, Hannelore Brucker MD, Wane Zuehlke CPA, Wayne Liebhard MD, and Donld Gehrig MD
Introduction
Dr. Geist described the meeting format: a brainstorm briefing about unionization of professional clinicians and its legal, economic and ethical ramifications. How did the nation get to this potential for industrial corporate vs. union strife? He presented slides showing the post 1965 origin of medical demand inflation for the first time in 90 years and the political attempt to fix the early 1970s inflation “crisis” rate of 7% through passing the HMO Act of 1973. HMO pre-paid Plans were given the perverse power to control use of the benefits they covered. [2] This system of Managed care (MC 1.0) rationing of care did not work, cost-price inflation continued. By 1988 premium rates rose to 18% annually, a real crisis. Business leaders throughout the nation decided to try the promises of the HMO industry to control costs. It worked. By 1996 HMO Draconian rationing reduced premium inflation rate to near 1%! The public anger over delay and denial of care and drive-by mastectomies and deliveries resulted in states passing patient bill of rights laws. The HMOs sensed that wearing the black hat meant political danger. Draconian rationing of care was cut back. By 2003, premium rate increases reached 15%. In 2003 Congress passed a law permitting sale of HSA-HDHP insurance policies to afford protection against unexpected financial catastrophe. By 2007 the competitive price of insuring against catastrophic financial loss from ill health dropped premium rates for HMO comprehensive coverage to 3.5%. The Plans almost foundered. In 2009 Obama regulations killed the HSA-HDHP competition to clear the path for 2010 ObamaCare’s powerful cartel-like managed care corporations to control costs allegedly through increased corporate quality and efficiency.
Union Doctor Testimony.
Over the past 15 years, healthcare in the U.S. has transformed from a physician-led, patient-centered model into one dominated by large corporate entities. Initially, physicians were promised a symbiotic relationship, relief from administrative burdens, greater financial stability, and more time with patients while protecting their autonomy. However, these promises were not upheld and very quickly physicians found they had traded autonomy for corporate structures that quickly prioritized profitability over patient care, leading to a fundamental shift in the doctor-patient relationship. Instead of the promised partnership, doctors became sidelined, increasingly seen as employees rather than decision-makers in both clinical and systemic settings.
As corporations took over, physicians were burdened with excessive documentation, unpaid clerical work, and pressure to meet payer-driven metrics. The focus on financial gains by healthcare administrators, many of whom were not practicing physicians, led to widespread interference in the physician-patient relationship, patient autonomy, service line shutdowns, hospital closures, and reductions in critical care, particularly in rural and underserved areas. Nonprofit healthcare systems, which were expected to focus on patient welfare, increasingly have adopted aggressive for-profit behaviors. Rural communities faced disproportionate harm: closures of mother-baby units, pediatric programs, and mental health services, forcing patients to travel long distances for essential care.
The erosion of physician leadership in decision-making has contributed to growing burnout, moral injury (where someone who holds legitimate authority has betrayed what is morally right), and epidemic rates of depression and suicide among physicians. As they struggle to adapt to this profit-driven environment, career longevity in the field has significantly diminished and it has become clear that adaptation and increased resilience is not a solution. In response, some physicians have begun organizing through unions to regain their voice in healthcare decisions. Unionization efforts have already led to positive changes in the Allina health care system, including stronger collaborations amongst healthcare professionals, protection and advocacy for patient care, protections for patients with medical debt and legislative advancements that hold healthcare systems accountable for service cuts.
This movement underscores the urgent need for physicians to reclaim their role in healthcare leadership. Unionization is a powerful tool to accomplish this, providing physicians and other health care providers the resources and legal protection they need to advocate for their patients at the system and legislative level. Without reasserting their influence, patient care and the future of the medical profession in the United States will continue its pattern of deterioration and dysfunction.
Legal Issues.
John Diehl, JD, thought that restoring prohibition of corporate practice of medicine laws is crucial. MN court decisions since 1933 dictated that the doctors’ duty to the patient was exclusive; there is no place for a middleman. Diehl went into the details of later court exceptions. His personal belief is that corporate vs. union “bargaining is warfare,” the antithesis of a professional workplace, and a system “tragedy.”
David Feinwachs, JD PhD, believes unionization is a credible health care worker response to corporate power and may help to protect patients. He described in detail the recent arrival of Private Equity (PE) firm financial engineering of medicine focused on Return On Investment (ROI), rather than on patient care needs. [PE profit motives sounds a bit like corporate cartel goals on steroids; a potential for added financial chaos—rwg.] PEs cut staff; cut patient safety; their hospital infection rates and falls increase. An intolerable situation that “cries out for collective action”: a need to “crumble the system” and for the FTC to stop bad mergers.
Economic Factors. Professor Stephan Parente, PhD, was in China but left us an intriguing video. He said the market needs to move to work directly with patients and the community. While he worked in the Trump administration, all organizations were mandated to post prices. The Biden administration then published guidelines for downloading price information. The complexity makes it difficult for public use. The response to complexity at the UMN Carlson School of Management is an IPhone application of the top 74 disease codes that allow an individual to search for places of services and for monthly updated prices. The app, My Med Vita (my medical life), is also capable of recording and controlling health information. This might be “back to the future using modern means”.
Dr Geist claimed that the hospital ACO corporation and its workers had a common enemy: CMS hegemony in the public sector and the HMO Industry near hegemony in private and now public sectors. Geist said that the logical conclusion is for hospitals and workers to cooperate in defrocking the corporation factories model where they have no real control of their income; they are nothing more than politically created factory machines oiled by hidden profiteering from rationing of care scams for “cost control”. Is it possible to eliminate the corporate model at least in the public sector? He thought, why not.
The current corporate cartel model of medicine itself is an enormously expensive system due to the expense of internal bureaucracy inflation and the inherent inefficiency of adjudicating claims. It has failed to control cost-price inflation for American families or the nation while in corporate network cages quality has deteriorated. PE’s recent invasion of medicine has made corporate practice of medicine more frightful. Profiteering from rationing care erodes the integrity of medicine and the integrity of nation’s attempt to control cost inflation, a frightful problem.
Once hidden profiteering is fully exposed the whole system of mini corporate ACO factories practicing medicine is vulnerable to extinction. A spontaneous retail medical marketplace of empowered American families is a replacement that would require no political social engineering in the private sector. Of necessity businesses will have to revert to proven affordability of HSA-HDHP real catastrophic insurance. Public sector reforms will require legislation. Legislation for Medicaid reorm is pending in the MN.
Ethical issues.
Dr. Geist read a verbatim message from Prof. Robert Kennedy, a professionalism scholar at STU. Kennedy’s four points are: 1) Physicians’ experience parallels the experience of other professionals including education. Professional autonomy is curtailed, even suppressed, and non-professional duties are imposed. New abilities to handle massive amounts of data directly leads to corporate centralization. 2) The medical profession is a victim of its success. Medical advertising has created a near infinite market now coupled with the conviction that no one should be unable to access care because of financial constraint. The metrics of success quietly but irresistibly shift from what professionals imagine to be important to preference of investors for profits (again, ROI). 3) Younger professionals have mostly made their peace with their new situation. The laments of older professionals strike younger colleagues as quaint and no reason for action. We have traded professional freedoms for access to technology and pleasant physical working conditions. “I think we have been bought cheaply.” 4) He is skeptical of unions for professionals. The results may be mechanizing services, sending them offshore, and transferring work to non-professionals. Unionization may encourage corporate acceleration of these cost cutting means.
How would physicians fare better then nurse unions? They can engage in work stoppages, but the optics [of strikes] and personal costs are terrible. The end game? Proponents may think unions would be a suitable instrument of addressing professional concerns. The end game costs might be willingness to diminish tensions and that physicians would be willing to sacrifice to diminish the intolerable tensions of conflict. [Are professional covenants of exclusive patient loyalty and autonomy thus imperiled? —rwg.]
Alternatives to corporate-union strife—account-based insurance
Dr Koshnick noted that PE invasion of medicine constituted a further serious risk to professional clinical autonomy. He recommended that the best way to combat the corporatization of medicine and its foibles is to prohibit the corporate practice of medicine. Physicians should have some business training in medical schools, so they have the skills to set up independent practices. It would be simple to set up direct primary and specialty care clinics to avoid the costs of third parties. Non-compete clauses should be legislatively eliminated to allow the freedom to opt out of corporate medicine. HSA regulations should be freed from their present restrictive regulations. See my upcoming November op-ed in the Heartland Health Care News on “Empowerment Accounts Can Fix Restrictive HSAs:: https://heartlanddailynews.com/2024/10/empowerment-accounts-can-fix-restrictive-hsas-commentary/.
Dr. Geist’s slides showed the alternatives to corporate factory medicine through MN Medicaid Reform. HMO Medicaid hegemony would be broken by a pending bill: a Family Medical Account (FMA) program, SF 2287. The senate and companion house bill will be re-introduced in the 2025 session. It empowers enrollees with money for OP care on a debit card (funding is about 40% of total annual individual cost). If an enrollee does not use an ER for sore throats and is lucky in health, they can pocket unused debit card money in a state bank for future health care needs. The next year begins repeat debit card funding. If the enrollees suffer a catastrophic expense (usually in-hospital care), Medicaid pays the bill. The new version of the FMA reform bill will make it the default Medicaid program and will raise fee rates to Medicare rates (about a 25% increase). The results: a TPA linked to a debit card is a low transaction cost (about 1/5th of an HMO’s); patient choice of Any Willing Provider (AWP) access for care; and on-site provider payment (which makes 3rd party HMOs irrelevant.) When eliminated by irrelevancy, the HMO/ACO cartel-like 3rd party profiteering from rationing care is gone. Empowered families entrusted with money for medical care means as patients they not only have free choice of place for care and are no longer welfare supplicants; they are families with money at the clinic door like their richer cousins. In the future, expansion of the FMA concept might be considered for the complex needs of the disabled or chronically ill (e.g., the successful CMS Cash and counseling and other programs [3,4]) and for MNCare.
Q and A.
Emphasized again was corporate usurpation of clinical decisions. One person thought unions are only a 4th party, not likely to help to fix medicine’s dystopias. An obstetrician recounted his experience of Medicaid pay too low to sustain his private clinic, which necessitated becoming a corporate worker. The problem in the corporation are cuts in local OB care endangering patient-centered quality of care; and the corporation says not to order fertility studies. It is predictable that unionization of a hospital corporation’s professional staff locally is only an inkling of what will soon happen nationally.
The meeting’s purpose is a briefing that we hope will lead to in-depth community re-consideration of today’s corporate troublesome means to quell medicine’s inflationary costs; corporate action has resulted in a unionization response of its professional workers. Can we do better than this?
Summary
David Feinwachs recounted the meeting high points: 1) prohibit corporate practice of medicine [the MN Medicaid Reform can be a 1st step; if it is a paradigm adopted by other states and later tailored for Medicare—rwg.]. This is a chance to end corporate factory medical practice. [IMO, the private sector will of necessity revert of the successful HSA-HDHP model of 2004-2009 through repealing pertinent IRS regulations]. 2) eliminate the parasitic 3rd party middleman. 3) medical decisions ought to be made by patients with the advice of their professional providers.
Those present kept talking until 9:15 PM. The discussion was too fascinating to leave! Enthusiasm is typical of a meeting where everyone gets a chance talk. [It is my hope that a booklet (or in digital form) of this meeting will be created; a template for community action—rwg.]
Postscript
[We have now addressed for the first time in MN medical history the many ramifications and possible pitfalls that might arise from the unionization of a hospital corporation’s professional staff. The meeting’s purpose was to break the ice; a briefing that we hope will lead to in-depth community and political re-consideration of today’s failed corporate attempts to quell medicine’s inflationary costs at too high a cost. Corporate factory model of medicine has led to medical staff unionization. The model remains a threat to the quality of patient care, to the integrity of medical professionals and to the profession itself, and to the integrity of family and national solvency. We can do better—rwg.]
Respectfully submitted,
Robert W. Geist MD, secretary Pro Tempore and Chief MPPA Librarian
[2] HMO Act of 1973. US Code chapter 42 sec. 300e (b) (1,2,3,4,5) and (c) 2D. https://www.law.cornell.edu/uscode/text/42/300e
[3] O’Shea L, Bindman AB. Personal Health Budgets for Patients with Complex Needs. N Eng J Med. 2016;375(19):1815-1817
[4] Paying for senior care. https://www.payingforseniorcare.com/paid-caregiver/cash-and-counseling-program
