Interest-based bargaining

When the leaders of Kaiser Permanente and the Coalition of Kaiser Permanente Unions shook hands on their Labor Management Partnership 20 years ago, they weren’t sure where it would take them. Today, it is the largest, longest-running partnership of its kind. It is also the most studied by university researchers.

A new book published by the Labor and Employment Relations Association (LERA) and Cornell University Press shows that the partnership remains a model for workplace innovation. “The Evolving Healthcare Landscape: How Employees, Organizations, and Institutions are Adapting and Innovating” devotes three chapters to LMP’s history, accomplishments and challenges.

Lessons for others

Adrienne Eaton and Rebecca Givan, professors at Rutgers University, and Peter Lazes, a director and researcher at The City University of New York, studied six health care partnerships, including LMP. They were struck by:

“…the extent to which unions have been proactive in driving [all] these efforts....Another development in health care partnerships has been a significant deepening of the role of labor relations staff in operational matters.

“It is [also] important to note that the cases described here have influenced one another because the key stakeholders have directly learned from each other....[For example,] union and management stakeholders in Los Angeles [Department of Health Services and SEIU Local 721] as well as union leaders from the University of Vermont Medical Center have looked to Kaiser for answers.”

Another chapter, by Jody Gittell of Brandeis University and KP Northwest staff members Joan Resnick, Sarah Lax and Eliana Temkin, reports on regional efforts to promote collaboration across work teams. KP was selected for the study in part for what the authors call its “record of leadership and innovation [including] in patient care delivery, health information systems and labor-management relations.” Several strategies, including “living room huddles”—an informal, building-wide get-together—and job shadowing across departments led to higher employee engagement and patient satisfaction scores.

An inside look

The chapter “Leading Change Together” by Jim Pruitt, vice president of labor relations for the Permanente Federation, and Paul Cohen, LMP senior business consultant, explains the conditions that gave rise to the partnership, the need to implement it consistently across the organization and the way it achieves results:

“By bringing together diverse points of view and providing a framework for joint problem solving, the Labor Management Partnership has helped Kaiser Permanente tackle difficult issues....The partnership formed because conditions demanded change. It has endured because it has achieved measurable results. And it continues to flex and grow because we follow a few key principles and practices [including] self-directed work teams, interest-based problem solving and honest conversations.”

All of which explains why outside experts continue to take an interest in the joint efforts of KP and the union coalition. Pruitt and Cohen quote Thomas Kochan, a professor at MIT's Sloan School of Management, who put it this way in a 2013 study:

“Kaiser Permanente is now one of the nation’s leaders in the use of frontline teams to improve health care delivery....The Labor Management Partnership continues to serve…as a model for health care delivery and improvement.”

Many of the several hundred health care workers who gathered at the Manhattan Beach Marriott on May 10 are used to working through the night—it goes with their jobs. But they aren’t used to waiting. By midnight, some were napping on the couches in the lobby. Others milled about in small groups, talking quietly. And some retired to their rooms and asked friends to call them if and when anything happened.

Finally, around 2 a.m., the news came: A subgroup had ironed out the final details. By 3 a.m., the hotel’s central ballroom was filled with cheering, hugging workers—and supervisors, middle managers and senior vice presidents. The 140 management and union negotiators who formed the Common Issues Committee (CIC) gave their unanimous thumbs-up to a new National Agreement that will guide the work of some 130,000 workers, managers and physicians in the nation’s largest private health system.

“It was like we had just won the World Series,” says Alan Kroll, director of the Clinical Contact Center in Colorado and a first-time member of the CIC. “We’d had our ups and downs as a team, but in the end, we all came through as a team. The energy and camaraderie was tremendous.”

R-E-S-P-E-C-T

“The energy of the room was not because we liked each other. It was because of the respect that partnership had brought,” says Ashwin Deo, an orthopedic technician in Sacramento and SEIU UHW member who served on the CIC.

The agreement, reached in the course of five three-day sessions from March to May, is the largest private-sector labor agreement negotiated in the United States this year. Like previous National Agreements, it covers not only wages and benefits but also goals related to service, quality, affordability, workforce and community health, and more. 

Yet how the CIC reached the agreement is even more remarkable than the agreement itself. Rather than engage in a power struggle, the negotiators used interest-based bargaining to solve problems. That process allowed it to focus on solutions to the biggest issue facing health care today—that it costs too much, and too few Americans can afford it—while maintaining Kaiser Permanente’s industry-leading wages and benefits.

Rather than chopping care or benefits to control costs, says John August, executive director of the Coalition of Kaiser Permanente Unions, the agreement “provides union members with the tools to tackle cost by improving care and efficiency. Improved care and efficiency, delivered by workers at the front line, are the key to extending quality care to every person in our country.”

“Our national bargaining is unique,” says Dennis Dabney, the senior vice president of National Labor Relations and the lead management negotiator. “There is not only a group of labor negotiators at the table, but a broad cross-section of our employees providing recommendations on how to better deliver high-quality, affordable care and ensure Kaiser Permanente is a great place to work well into the future.”

Moreover, the outcome is a testament to the interest-based approach to partnership, not just interest-based bargaining.

“As our facilitators told us, economic issues are tough to resolve in interest-based bargaining,” says Adam Nemer, care delivery finance officer in the Northwest and a member of the bargaining subgroup that focused on benefits. “In the end, we met both management and labor's key interests. But I suspect that was not just because of what happened at the benefits table. It was also the result of an open and honest dialogue on benefits between senior labor and management leaders over the past few years. It was about trust and transparency. In my view, we didn’t reach a solution just because of interest-based bargaining—but we couldn’t have gotten there without it.”

Revolutionary healthy workforce plan

As part of the solution to controlling costs, the agreement includes a revolutionary plan to create the healthiest workforce in the health care industry. Beginning in 2013, the agreement will reward the collective workforce achievement of reduced health risk factors, measured by body mass index (BMI), cholesterol levels, blood pressure levels, smoking rates and workplace injury rates.

“Unions and management agreed that health improvement is an essential strategy for reducing chronic conditions—one of the leading drivers of rising, unsustainable cost,” says SEIU UHW President Dave Regan. “This is a high-road, long-term strategy for the common good.”

Those involved in the process say it’s unlikely that the high road would have been taken had these been traditional, adversarial negotiations. As Joan Mah, an optometrist at San Rafael Medical Center in Northern California and a first-time observer representing her ESC-IFPTE Local 20 colleagues, put it: “Traditional bargaining is really about what I want and not about what is right….When you take the time to allow management and labor to surface their interests, it’s really looking for a global solution.”

“At times it was frustrating, but it was also interesting to see how the interest-based process led us to options we could work with,” says Jean Melnikoff, a senior director of human resources for Southern California, one of the management co-chairs of the workforce of the future subgroup.

Opening doors—and minds

Her sentiment was echoed by members of every subgroup. But that is not to say the process is easy.

“When things get difficult, you need to regroup and work your way through it,” says Arlene Peasnall, senior vice president of human resources in Southern California. “But you end up with better results and stronger relationships.”

“The people who’d done it before said, ‘It’s OK, it can be done,’” says orthopedic technician Deo. “Don’t be afraid of the tension in the room. Don’t be afraid of emotions, because that’s what gets creativity out….When labor and management are at the table, talking to each other as equals, and the ideas are valued equally—I think that opened a lot of doors. And minds, too.”

Our National Agreements commit us to operating principles that you won’t find in most labor contracts:

Power of partnership

Interest-based bargaining doesn’t guarantee success. It works for us because our partnership works.

The partnership between Kaiser Permanente and the Union Coalition came about in 1997, in a challenging environment. The company had a long and close history with the labor movement. But amid growing market pressures and labor unrest in the 1980s and ’90s, we were at a crossroads. Most of the local unions representing KP workers formed the Coalition of Kaiser Permanente Unions to launch a unified corporate campaign.

Facing what would have been a mutually destructive strike, the leaders of both parties took a chance on an alternative approach. They agreed to:

• Work collaboratively to improve the quality and affordability of care for the patients and communities we serve
• Help Kaiser Permanente lead the market in health care
• Involve unions and individual workers in workplace decisions
• Provide job security and be the best place to work in the industry.

Solving tough issues

Today it is the largest, longest-running and most comprehensive such partnership in the country. It covers 80 percent of our represented workforce and includes 43 local contracts, in addition to the national agreement. It has delivered industry-leading contracts, and helped Kaiser Permanente achieve industry-leading quality, solid growth and a culture of collaboration.

In short, our partnership is more than a labor relations strategy, it’s an operational strategy that provides strength and stability for Kaiser Permanente and our workforce, and better care and service for our members, patients and customers. It provides an infrastructure for continuous performance improvement and a way to better resolve difficult issues.

For example, during the Ebola crisis of 2014, health care providers and members of the public were concerned about how to best control spread of the disease. Kaiser Permanente, our union partners and the Centers for Disease Control and Prevention stepped back from the fear and misinformation that prevailed elsewhere. We worked together to develop training processes, educate people and agree on steps to ensure the safety and compensation of employees involved in caring for patients with the Ebola virus. Two of our hospitals were among the first in the United States to be recognized as part of the nation’s Ebola preparedness and response plan.

Frontline teams lead change

Day-to-day partnership is most evident in more than 3,400 unit-based teams—our term for the natural work groups that deliver care and service. Team members are trained in performance improvement techniques to spot opportunities, conduct small tests of change, assess results and implement solutions. They provide a new level of learning and decision making about the quality of their work and how to do it better.

UBTs are co-led by a union member and the manager or supervisor. In clinical settings they include physicians. We track the performance quarterly of every team, based on jointly set measures of performance, and we set aggressive goals for the number of teams to reach high performance, measured on a 5-point scale.

Seventy percent of them are rated high performing. That’s important because our data show that high-performing UBTs get better outcomes on service, quality, safety, attendance, patient satisfaction and employee satisfaction.

New tools and skills

Amy Edmondson, Novartis Professor of Leadership and Management at Harvard Business School, has studied Kaiser Permanente’s model of teaming and offered this assessment:

Unit-based teams are a way to be entrepreneurial and a way to build greater accountability by those on the front line. The teams push people to brainstorm, to be attentive to what they see and to put their own experience to good use. The teams have the opportunity to identify challenges and they have tools and skills with which to work, but it’s up to them to put them to good use to make a difference for patients.

Our teams now have more than 7,700 frontline improvement and innovation projects under way. To align local team efforts with the organization’s broader strategic goals, all projects are focused on one or more points of the Kaiser Permanente Value Compass – a guidepost that shows our four shared goals of best quality, best service, most affordability and best place to work, with our patients and members at the center of all we do.

Kaiser Permanente Value Compass

About 35 percent of these projects are focused on reducing waste or improving affordability. And 267 of those projects, produced joint savings of $10 million in 18 months; potential savings are much more. Twenty-eight percent of projects are focused on service enhancement. Here’s a snapshot of improvement projects conducted at each point of the Value Compass:

• Best quality: A medical imaging team worked across departmental lines to ensure that patients who visited the medical office for a flu shot, and also were due for a mammogram, could get one promptly, many within 20 minutes.
• Best service: A cross-functional team of service center workers redesigned work processes to handle incoming calls in the wake of the Affordable Care Act. The team cut the number of customer handoffs by 60 percent and reduced mean processing time for members’ issues from 26 days to three days.
• Most affordable: An inpatient pharmacy team launched a cost-reduction effort that is saving more than $600,000 a year by better managing inventories, alerting physicians to less costly equivalent drugs and reducing drug wastage.
• Best place to work: As part of our voluntary workforce wellness program, 62 percent of eligible employees – more than 80,000 people – participated in a confidential health assessment to identify potential health risks. 

Getting measurable results

We know our strategy is having an impact on organizational performance and the workplace experience. Our 2014 employee survey showed strong correlations between several measures of employee engagement and job performance.

Departments that scored high on an index of 18 measures of workforce effectiveness (including things like taking pride in the organization, information sharing, understanding of goals and being held accountable for performance) reported significantly better results in service, quality, workplace safety and attendance. For instance:

• 9 percent higher patient satisfaction scores
• 18 percent fewer lost work days
• 41 percent fewer workplace injuries
• 91 percent fewer bloodstream infections in at-risk patients

In addition, members of high-performing unit-based teams are far more likely to say they have influence in decisions affecting work, are comfortable voicing opinions, and feel co-workers are respected despite differences.

Higher job satisfaction also contributes to significantly lower employee turnover. In California, for instance, our turnover rate for all hospital-based employees ranges from 6 percent to 8 percent, depending on the job type – versus the 2014 industry average of 9.4 percent statewide reported by the California Hospital Association.

Union Coalition members and Kaiser Permanente also collaborate on many issues rarely open to union participation. For instance:

Workforce planning and development: We invest heavily in workforce training and development – and we develop and implement most of that work jointly. For instance, a union-management Jobs of the Future Committee in Southern California is identifying emerging technology, assessing the impact on workers, managers and physicians, and developing training plans and career paths. More such efforts and investments are under way.

Market growth: Bringing together union members and Kaiser Permanente sales and marketing teams, our joint growth campaign helped win, expand, win back or retain 33 accounts covering 125,000 Kaiser Permanente members in 2014.

Meeting organizational challenges

Our partnership is not perfect. It can stretch us to engage and educate our many stakeholders, and find time to solve problems and improve work processes in the course of day-to-day operations.

But in my experience, the biggest challenge is spreading innovation – facilitating the exchange of ideas and the adoption of successful practices from one team, medical center or region to another. We know that new initiatives can take root faster and more consistently if they’re modeled on a proven concept – especially when they are championed by our own work teams. Variation can be a plus when you’re looking for new and better ways to do things; when you’ve found the best way, you need to make it a work standard.

We recognize and spread success by communicating with teams regularly in multiple formats; through peer consultants and sponsors in every facility; a system-wide database that tracks teams’ tests of change and outcomes; and UBT Fairs, where teams share their findings in person.

Keys to success

Our Labor Management Partnership is now in its 18^th year, and we are still learning how to take it further. We continue to believe it can be a model for labor relations and health care delivery. Four factors in particular are essential to success:

• Develop leadership at all levels: Since its founding, our partnership has thrived under three different Kaiser Permanente CEOs and three different Union Coalition executive directors. Change is not sustainable if it depends on one top leader. Frontline and mid-level leadership, on both the management and union side, is key. We train for partnership at all levels, and have found that interest-based problem solving and bargaining are powerful learning development tools for up and coming leaders.
• Build trust: To work together, partners must trust one another. That trust must be earned, and is established over time. It will be tested, but the building blocks are well known: Do what you say you will do. Honor your commitments. Treat others with respect and deliver results.
• Measure results and share data: We set goals and track performance for all our teams. We share business and financial data with our partnership unions in bargaining, and share departmental and unit-level results with teams working on performance improvement projects. Teams can’t succeed without good information upon which to set clear expectations.
• Create a shared framework: Our workforce is diverse in every way – demographic, geographic, professional and technical. We also have different (and sometimes competing) needs, interests and concerns. But we share a desire to make our members’ and patients’ lives better. The Value Compass – with the member and patient in the center – provides a common touch point that we use to set priorities and guide decision making.

Our union and organizational leaders know how to do business in traditional, more adversarial labor relations settings. We’ve done it. We choose to work in partnership – not because it feels better (though it does) or because it’s easier (it’s not). We do it because it gets results – for the organization, the unions and workers, and the members, patients and communities we serve.

It’s time to look beyond labor relations and find new ways to innovate and engage teams. Our leaders took a risk 18 years ago to listen, understand and work together. It proved to be better way to deliver health care and achieve our social mission.

This article was originally published in “Perspectives on Work,” the magazine of the Labor and Employment Relations Association (LERA), Volume 19. Reprinted with permission. For more information, visit LERAweb.org.

Also see a PDF of the original article, with additional information about Kaiser Permanente and the Labor Management Partnership.

Ten weeks of national bargaining between Kaiser Permanente and the Coalition of Kaiser Permanente Unions concluded Saturday, June 6, when 150 union and management representatives approved a tentative 2015 National Agreement. The agreement now goes to the 28 union locals that compose the coalition for ratification and to Kaiser Permanente senior leaders for approval.

The three-year tentative agreement is designed to help unionized workers and managers achieve quality, affordability and safety of care; prepare for jobs of the future; and develop innovative solutions to health care challenges. The agreement also will enable our 3,500 unit-based teams to better deliver award-winning care and service to Kaiser Permanente’s more than 10 million members and patients.

“This is an outstanding agreement that deepens our ability to provide affordable, high-quality care to our members and patients,” says Dennis Dabney, the senior vice president of National Labor Relations and Office of the Labor Management Partnership. “Kaiser Permanente leads the industry because it is a great place to work and a great place to receive care—and the two are inseparable.”

“We’re on year 18 of a remarkably successful strategy,” says Hal Ruddick, executive director of union coalition. “Our contract is better than ever, Kaiser Permanente’s quality and service scores are higher than ever, and the organization and unions are both healthy and growing. Partnership pays off for workers, consumers and mission-driven organizations like Kaiser Permanente.”

Agreement highlights

The agreement includes wage increases in each year of the agreement (see specifics below), provides operational flexibility and bolsters joint problem-solving capabilities. It builds on the successful 2012 National Agreement, strengthening provisions for workplace health and safety, providing additional funds for workforce training and development and ensuring the consistent application of partnership principles.

The new three-year tentative agreement includes:

• Across-the-board wage increases in each year of the agreement: All employees in Northern and Southern California represented by a coalition union receive 3 percent increases in the first two years and 4 percent in the third year. Employees in the regions outside of California represented by a coalition union will receive a 2 percent increase each year of the three-year agreement. In addition, they will receive a 1 percent increase at the end of the third year.
• Enhancements to benefits such as dental coverage, life insurance and tuition reimbursement. The tuition reimbursement was increased to $3,000 per employee per year. For the first time, tuition, dental coverage and life insurance are standardized for coalition union members across all regions.
• A long-term solution that protects retiree medical benefits for current and future retirees, with no net increase to retirees’ out-of-pocket expenses, while reducing liabilities associated with those benefits.
• Increased funding to the Ben Hudnall Memorial Trust and the SEIU UHW-West and Joint Employer Education Fund to ensure career development for Kaiser Permanente’s diverse workforce.
• Improved methods for assessing unit-based team performance and for spreading and adopting successful practices.
• Updates to our groundbreaking Kaiser Permanente Total Health Incentive Plan,  which rewards employees for healthy behavior and provides incentives for collective improvement.
• Joint participation on community health projects by the coalition unions in KP’s local and regional Community Benefit programs.

Next steps

Our agreement is the largest private-sector contract in the United States this year. Once it is approved by Kaiser Permanente senior leaders and ratified by union members this summer, it will take effect Oct. 1, 2015, and be in effect through Sept. 30, 2018.

The impact of the agreement “goes beyond the words on paper,” says Jerry Vincent, the Northern California region’s director of Labor Relations. “It lays the foundation for us to continue to provide quality, affordable care for many years.”

“There were some tough moments,” Denise Duncan, RN, the executive vice president of UNAC/UHCP, says of the negotiations. “But people came back together. It was a reminder that our national agreement—and our partnership—is very strong, and we keep making it better. There’s nothing like it anywhere else.”

For more information, see www.bargaining2015.org.

Improving performance and strengthening partnership is the work of the Operational and Service Excellence in Partnership subgroup—one of three subgroups in national bargaining.

At the third session of national bargaining, members of the subgroup made recommendations on topics including improving learning, accountability, problem solving, consistency, flexibility and support for unit-based teams.

The many perspectives represented at the table—with all regions and a wide range of job types in the mix—enriched the group’s discussions.

“We are really making progress. We’re having good discussions that can help people back at work overcome barriers in their day-to-day UBT work and make their lives easier and better,” says Holly Davenport, a union representative for UFCW Local 770 in Southern California. The group is investigating ways to improve the spread of practices from one team to another and to ensure that UBT assessments accurately reflect performance.

One LMP

The subgroup is also looking at ways to improve partnership at all levels of Kaiser Permanente and at the elements—from tools to training—that affect its success.

“Our group is trying to establish the principles of partnership and ensure they’re applied consistently across regions,” says Rita Essaian, an executive administrator with Southern California Permanente Medical Group.

“No matter what region you’re in, the partnership should be the same,” says Ruby Robley, a respiratory therapist at Antioch Medical Center in Northern California and an SEIU-UHW member. “We need One LMP, just like One KP.”

First-timers excel

Many of this year’s negotiators are new to bargaining in partnership, including manager Casper Yu, the director of Dental Sales and Marketing in the Northwest. “I love how this process works,” he says. “We negotiate and still come out with great personal and working relationships. I tell people, ‘This is what it truly means to be in partnership. I get it now.’”

Operational and Service Excellence in Partnership is one of three subgroups tasked with crafting the next National Agreement. The other two are Total Health and Workplace Safety and Work of the Future.

Visit bargaining2015.org for more information, videos and slideshows and to sign up for bargaining updates.

Finding ways to help Kaiser Permanente employees enjoy long, healthy, productive lives is the mission of the Total Health and Workplace Safety subgroup.

The subgroup, one of three in national bargaining this year, will expand upon the achievements of the 2012 National Agreement. It will also address how Kaiser Permanente and the Coalition of Kaiser Permanente Unions can partner to improve the total health of the communities we serve.

Delivering exceptional care and service and supporting a healthier, injury-free workforce go hand in hand. “We can’t provide quality, affordable care to our members and communities unless we first provide a safe and respectful environment that promotes the collective health of our workforce,” says Kathy Gerwig, Kaiser Permanente’s vice president of employee safety, health and wellness and the management co-lead for the subgroup.

Personal and collective health

In 2012, negotiators established the groundbreaking Total Health Incentive Plan. The wellness program encourages employees to assess their own health and aim for collective improvement in measures like cholesterol and body mass index. In addition, healthy employees can serve as role models for Kaiser Permanente patients.

This year, the parties will suggest ways to create a healthier, safer work environment by improving employee access to services such as wellness coaching and better understanding trends in workplace violence and prevention. Another goal is to encourage employees to eat healthily, exercise at breaks and prevent workplace violence and intimidation.  

Expanding wellness to communities

In a first for national bargaining, the subgroup will also suggest ways to bring a holistic approach to wellness into communities Kaiser Permanente serves, especially those with limited access to healthy food, affordable health services and places to exercise.

“Our union members tend to live in communities that have high needs around health or issues around violence,” says Meg Niemi, the president of SEIU Local 49 and also a union co-lead for the subgroup. “So our members have an interest in their communities being healthier and safer further upstream, before they need critical care.”

The other two subgroups tasked with crafting recommendations are Work of the Future and Operational and Service Excellence in Partnership. (For more on Work of the Future, watch this slideshow and read this article.) Negotiators are developing a tentative agreement that will become the National Agreement after it is approved by Kaiser Permanente leadership and ratified by union locals this summer.

Visit bargaining2015.org for more information, videos and slideshows, and to sign up for bargaining updates.

Kaiser Permanente and the Coalition of Kaiser Permanente Unions began national bargaining on March 30—and the negotiations have gotten attention from the press in California, including an article in the Sacramento Business Journal and a report on KQED public radio.

The negotiations are likely to be the largest private-sector contract talks in the United States this year. Some 150 negotiators are coming together from all over the country every two weeks through June to craft the new national agreement, which serves as the union contract for more than 100,000 Kaiser Permanente workers represented by coalition unions.

Hear from union members, management and union co-leads and see how the next national agreement is being created: Watch a three-minute video that captures the spirit of the National Bargaining kickoff and view this slideshow from the first negotiations.

Stay up to date at bargaining2015.org.