The Accountable Care Organization (ACO) offers the promise of shared savings when the ACO delivers high-quality healthcare more cost effectively. Without question, ACOs will change the way healthcare providers do business. For the employer with a unionized workforce, however, the promise of the ACO will wither if the employer is unable to implement necessary operating changes. And for nonunion employers, ACOs may create new vulnerability to union organizing. The purpose of this article is to anticipate potential trouble spots and prescribe preventive treatment as healthcare employers enter the ACO world.

Tell Me Where it Hurts

The premise underlying ACOs is that by joining forces, healthcare providers can reduce cost and improve outcomes. So, for example, a hospital may coordinate the delivery of care with home healthcare providers to ensure that elderly patients with chronic but manageable conditions take medications as prescribed and engage in a healthy lifestyle. Or, a hospital and a physician group may be jointly accountable for outpatient, non-emergent services at a lower cost. If the ACO is successful, then it may be entitled to share in the savings with Medicare.

The following are examples of potential labor relations trouble spots for ACOs:

  • A unionized hospital may want to provide direction to employees of its nonunion partner in the ACO. Does that make the nonunion partner’s employees hospital employees (i.e., potentially part of the bargaining unit)?
  • If the hospital and the ACO have employees who do similar work and the hospital sends patients to the ACO for lower-cost services, is that subcontracting of bargaining unit work?
  • The hospital may change job descriptions or may wish to have more flexible job descriptions to allow for more efficient staffing. Will that constitute a negotiable change in employee working conditions?
  • The union may demand wage increases or bonuses that allow union employees to participate in the Medicare shared savings program. The employer may want to move away from the classic compensation structure—step increases, lock-step compensation and shift differentials—to reward better patient outcomes and/or collaboration across job classifications. Can these interests be accommodated?
  • Employees of the hospital’s partners may be vulnerable to organizing through more frequent interactions with unionized hospital employees.

Rx: Preventive Care

For all of these potential ills, preventive care is the best course of treatment.

For union employers, changes in employees’ wages, hours and other conditions of employment (such as employee evaluations and discipline) generally are within the scope of bargaining. Whether the employer has a duty to bargain with the union before it makes a decision, or only over the effects of the decision, or both, depend on the particular facts and circumstances. For example, what is driving the change? And what does the collective bargaining agreement (CBA) say about the employer’s unilateral right to make the change?

Employers should anticipate demands to bargain and have a strategy ready before giving notice to the union. For example, if employees will be required to perform new duties as a consequence of a change in operations, the decision to change duties might not be negotiable, but the union will have the right to demand to bargain over employee evaluations or discipline related to the new duties. The employer might want to offer a grace, or “ramping up” period, or additional training for employees, and should build enough time into its implementation timetable to allow this to happen.

In addition, as CBAs open for negotiation, employers may bargain for broader management rights, greater latitude in adopting work rules or modifying job descriptions and the ability to subcontract bargaining unit work. With such language in a CBA, the union can waive its right to bargain over decisions that might otherwise be within the scope of bargaining. Thus, for example, the employer may ask for the right to change qualifications for a job classification or increase productivity standards without having to negotiate with the union. Instead, the employer may offer to “meet and discuss” with the union. One caveat is that a waiver of the right to bargain over a decision may not absolve the employer of the obligation to bargain over the effects of the decision.

Hospital employers also may want to depart from the classic compensation structure, which rewards longevity and often places heavy financial burdens on the hospital for practices intended to allow staffing levels to follow fluctuations in patient census. Hospital employers also may need to renegotiate layoff language, so that they retain the right to keep more qualified employees, or employees with special skills, without regard to seniority. These changes will need to be paid for in some manner; the union will want some trade-off to justify what the rank-and-file would surely consider tremendous “take aways.” This is where the potential increased revenue offered by the ACO model can be useful. Sharing some of this revenue with employees is less risky to the employer than automatic step increases, or on-call or call-off pay, which must be paid whether or not the hospital is profitable.

ACOs may create opportunities for increased unionization in healthcare. Nonunion employees may be introduced to unions representing employees of their ACO partners. Unions also may conduct corporate campaigns, exerting pressure on nonunion ACO partners to agree to neutrality/card check agreements. Finally, it is widely suspected that the National Labor Relations Board (NLRB) may make it easier for unions to organize, in a single bargaining unit, employees of a principal employer and a subcontractor. See Miller & Anderson Inc. Case 05-RC-079249; Bergman Brothers Staffing Inc. Case 05-RC-105509. Such a step could allow unions to try to organize multiple ACO partners or to expand existing bargaining units through accretion.

Employers should be proactive, maintaining healthy employee relations practices that will discourage organizing efforts. Good and timely communication with employees, transparent policies and fair and consistent treatment of employees are essential. Employers also should review employee handbooks and personnel policies to ensure that they comply with the latest NLRB decisions. This will reduce the risk of successful unfair labor practice charges, always good fodder for union organizing.

Call Me in Two Weeks

While the ACO is in its relative infancy, we already are seeing new variants on current models and creative means of improving healthcare outcomes at reduced cost. Managing the labor relations aspects of ACOs thus will require regular check-ups—periodic review of job descriptions, pay policies and staffing strategies and assessment of labor relations strategy to ensure that it can support the continued health of the organization.