October 18, 2021

2021 National bargaining facts

Clarification on key topics as we work to reach a mutually beneficial agreement.

Kaiser Permanente and the Alliance of Health Care Unions have been bargaining for a new national agreement since April 2021. Most of the current labor contract agreements expire September 30, 2021. We look forward to reaching a mutually beneficial agreement that will help to ensure we can continue providing high-quality, affordable health care for our communities.

Topics needing clarification

Facts

The Labor Management Partnership: Bargaining in good faith

Fact: We have pledged to bargain in good faith and are committed to reaching a fair and equitable agreement that provides our Alliance-represented employees with excellent, market-competitive benefits and wages. Having different views on challenging issues does not equate to bargaining in bad faith.

Interest-based bargaining is a proven approach that creates a positive framework where all parties collaborate to develop mutually beneficial solutions based on their shared interests.

Kaiser Permanente and our partnership unions have a strong track record of successful interest-based bargaining, which has helped lead to win-win agreements that include shared accountabilities for outcomes, employee development opportunities, and structures to improve the quality and delivery of care to our members.

Kaiser Permanente’s Labor Management Partnership was created 24 years ago and has a great track record of serving as the framework through which we can solve sometimes very difficult problems. Instead of abandoning it, in the spirit of the partnership we ask union leaders to continue to work constructively toward an agreement, rather than call on staff members to walk away from patients who need them during this pandemic. 

Market competitive wages

Fact: We are committed to providing our employees with excellent, market-competitive wages and benefits wherever they work.

According to an independent analysis by a reputable, third-party organization we commissioned at the start of 2021, our employees represented by Alliance unions earn about 27% above the average market wage, and in some places 37% above market levels. 

Our offer includes wage increases that will keep our employees among the best compensated in health care.

One of our bargaining objectives is to help bend the curve on wage growth to ensure we can deliver on our affordability commitments.

“2-tier wages”

Fact: At Kaiser Permanente, we know the health care landscape is changing, and we risk losing ground in our ability to provide affordable care and competitive pricing. Millions of Americans struggle with health care expenses and are seeking more affordable options or are switching to government-sponsored plans. Looking ahead, we simply must reduce expenses to remain competitive long term. We are looking beyond wages and taking purposeful actions across all parts of Kaiser Permanente to slow our overall cost growth to address the growing challenges of affordability and our changing membership.

Our wages and benefits represent more than 50% of our overall cost structure. We remain committed to ensuring that we can continue to be a best place to work and a best place to receive care. To that end, we are not proposing any kind of wage or benefit reduction for our 48,000 current Alliance employees.

Rather, to help address future costs, our proposed framework includes a market-based compensation structure for Alliance employees hired in 2023 and beyond:

  • Competitive wage scales for employees that would be more aligned with each market
  • Market-based approach that would ensure competitive wages for employees, including a premium to the market, while addressing the organization’s cost challenges
  • Performance Sharing Plan payout opportunity of 2.0% (at target) for all markets; all other provisions under the current PSP plan in the National Agreement would remain unchanged
  • Performance-based 1% contribution to defined contribution plans would not be available for employees hired after December 31, 2022
Working together to drive affordability

Fact: Savings, efficiencies, and quality improvement generated by unit-based teams are greatly valued. The ideas, creativity, and dedication of our employees to develop new ways to advance our business and improve patient care is part of what makes Kaiser Permanente the best place to receive care.

Over the years these contributions have helped us find efficiencies and drive down our costs. We are no longer gaining the same level of efficiencies and must look to other areas to address our cost structure so that we can ensure we remain affordable.

Employee wages and our rich benefits make up more than 50% of Kaiser Permanente’s expenses. Our represented-employee wages are significantly over market and, if we remain on the current trajectory, will push us out of any kind of affordable range.

COVID-19 employee appreciation 

Fact: We deeply appreciate the extraordinary commitment and dedication of all Kaiser Permanente employees throughout our response to the pandemic, especially those who have been serving on the front lines to fight this deadly virus.

Since early in the pandemic response, Kaiser Permanente has provided nearly $600 million in employee assistance to ensure that our front-line employees had access to alternate housing, special child care grants, and additional paid leave for COVID-19 illness and exposure. And despite a challenging operational year, we ensured each Kaiser Permanente employee received bonus payouts of 100% of target or more in recognition of their invaluable contributions in 2020. 

Strike planning

Fact: Kaiser Permanente is proud to employ more union-represented employees than any other health care organization in the country and we are committed to bargaining in good faith to reach fair and equitable agreements that provide our employees with excellent, market-competitive wages and benefits.

At the same time, we have a responsibility to ensure uninterrupted, safe, high-quality care for the 12.5 million members that we serve in communities across America. And while we expect to reach a mutually beneficial agreement that will address the interests of both parties, we are obligated to the communities we serve to be well-prepared for the unlikely scenario of a labor disruption. Accordingly, we have established plans in each of our markets to ensure continuity of care, which includes sourcing temporary staff.

Staffing

Fact: The COVID-19 pandemic has been an incredibly challenging and stressful time to work on the front lines of health care. We are extremely grateful for our workforce, whose commitment to providing care and service throughout the COVID-19 pandemic has been nothing short of inspiring. We have worked hard to ease the stresses that this pandemic has caused our people. Yet, there is a national health care workforce shortage crisis affecting the entire industry.

Despite these challenges, Kaiser Permanente consistently remains a best place to work. We continue to hire employees at a rate that aligns with membership growth, and to make significant investments to help increase the number of individuals entering the health care profession, with tuition assistance for our current employees, fellowships and residencies for future hires, and grants to expand capacity in degree programs.

Reinvesting in our people, our care, and our communities

Fact: Our priority is always the health and safety of our patients, members, and employees. Kaiser Foundation Health Plan and Hospitals is a nonprofit organization. We spend 100% of our revenue to deliver on our mission.

About 97% of our revenue is spent directly on providing care and coverage to our 12.5 million members and to improve the health of our communities. The remainder — about 3% — is our margin, which is invested back into the organization so we can continue to care for our members and patients.

Reserves 

Fact: As a nonprofit organization, all our revenues go into providing high-quality, affordable health care and to improving the health of our members and the communities we serve.

We are all here for our patients — not to earn a profit or pay shareholders. Kaiser Permanente, like other health plans, maintains financial reserves to cover our obligations if something unexpected were to occur or if regular business was interrupted. Further, our reserves are greater than a traditional health plan because we are more than a health plan. Our reserves support our hospitals, medical offices, employee benefits (including pensions), and other elements of our integrated model of care that other health plans do not have.

CARES Act

Fact: Kaiser Permanente received and is eligible to retain distribution of CARES Act relief funds totaling more than $500 million, and we have declined all of it with the exception of $28.4 million for Maui Health System, a nonprofit subsidiary of Kaiser Foundation Hospitals. Maui Health System operates 3 community hospitals and affiliated outpatient services as a public-private partnership on the islands of Maui and Lanai. These community hospitals operate on a different economic model than Kaiser Permanente, with a greater share of revenue from traditional fee-for-service payments and a greater share of costs from providing care to the community, not just Kaiser Permanente members.

Executive compensation 

Fact: Kaiser Permanente sets senior management compensation levels using market wage data that allow us to successfully attract and retain the leadership we need to deliver affordable, high-quality health care to our members and improve the health of the communities we serve. Our goal is to provide a reasonable and competitive compensation program, relative to our organizational size and complexity.

Kaiser Permanente is the largest, most comprehensive nonprofit health care organization in the nation, one that consists of a large and complex national health plan and one of the nation’s largest medical service delivery organizations. We compete for talent on a national level with for-profit and not-for-profit health plans and hospital organizations. The senior management at Kaiser Foundation Health Plan and Hospitals has unique leadership positions, in that they have 2 roles: overseeing a major health plan with 12.5 million members as well as managing 727 medical offices, 39 hospitals and other facilities, and a total care delivery system in multiple states. This combination makes Kaiser Permanente the largest vertically integrated health plan in the country and the largest and most complex health care nonprofit organization.