By Jeffrey Barg

A brief history
Part II

Published September 1999

Part I: Physician unions take root in Pa.

OTHER COVERAGE OF PHYSICIAN UNIONS

• Collective bargaining vote challenges AMA leadership

• Physicians seek antitrust waiver

• Surgeons fight Blue Cross rate cuts

• Medical society explores regionalization and MD unions

• Legal issues of physician unionization

• Physician unions gain steam

• AMA collective bargaining program

• A Pennsylvania physician guild

• Building a physician union in the Delaware Valley

• The legalities of physician unions

• Prospect of physician unions in Pa.

• React to this article in the Discussion Forum.

Under the glare of local and national television cameras, the PCMS hosted a meeting on physician unionization featuring presentations from officials of the Office Professional Employees International Union (OPEIU).

Physician unions were not new to Pennsylvania, but they were always a marginal phenomenon, well out of medicine’s mainstream. They were also peripheral entities within the labor movement, usually constituted as independent unions outside of the AFL-CIO umbrella.

But on this February evening, a shared frustration with managed care and the corporatization of health care brought together a conservative, 148-year-old county medical society—the eighth largest in the country—and an AFL-CIO affiliate to seriously explore the creation of a physician guild.

The possible uniting of organized medicine and organized labor provoked a civil war within the PCMS, resulting in the de facto impeachment of then-President Raymond J. Lodise, M.D., and the relegation of the union issue to the perpetual study track. But the issue kept reemerging throughout the state.

In the fall of 1997, Robert B. Sklaroff, M.D., then-president of the Pennsylvania Society of Internal Medicine, sent a proposal to form a Pennsylvania Physicians Guild to the presidents of every statewide specialty and county medical society in Pa. He received no response.

In 1998, Allegheny County Medical Society’s (ACMS) new president, David S. Zorub, M.D., made exploration of physician unions one of the three top priorities of his presidency. ACMS held a meeting on unions in April and devoted a full issue of its Bulletin to the topic. But, again, it failed to get beyond the study phase.

Nonetheless, 1998 proved to be the year that Pa. organized medicine established a mechanism to create collective bargaining units and that an AFL-CIO affiliate developed a foothold among Pa. self-employed physicians. And 1999 saw a different AFL-CIO affiliate gain a foothold among Pa. salaried physicians.

PMS Division of Representation & Geisinger

As Zorub noted in his essay recapping the ACMS meeting on unions: "The Pennsylvania Medical Society was viewed as having a vested interest against unions, since they could make organized medicine obsolete. PMS Executive Vice President Roger Mecum instead laid out the priorities of its new Division of Representation . . . [which] will do everything that unions and/or guilds can do, except represent non-supervisory employed physicians for the purpose of collective bargaining for wages and working conditions."

At the October 1997 PMS House of Delegates meeting, a resolution to form a Division of Representation was adopted and a resolution to study creation of a subsidiary organization that would be permitted to collectively bargain was referred to the Board. In January of 1998, the PMS Board of Trustees approved a plan to implement a two-part Division of Representation. It authorized the formation of the Subdivision for Member Representation, which would assist primarily self-employed physicians on a wide range of legal, regulatory and contractual issues. But it delayed forming the Subdivision for Collective Bargaining, which would assist non-supervisory employed physicians in organizing for the purposes of representation, negotiation and collective bargaining.

The deferral of the Subdivision for Collective Bargaining could be viewed, on the one hand, as merely a matter of indecision over whether to conduct the collective bargaining internally (and if so, how) or to conduct it through an outside contractor (and if so, with whom). But delaying implementation could be viewed, on the other hand, as betraying a fundamental discomfort with establishing the charge of the subdivision. Such doubt was manifest through repeated public statements that the Division of Representation could not represent members for collective bargaining, even as that was one option being considered.

Further complicating the picture was PMS’s involvement with a group of disgruntled physicians at the Geisinger Medical Center in Danville. Beginning in the summer of 1997, a third of its medical staff formed the Geisinger Clinicians Group (GCG) to address grievances with the hospital administration. The medical staff of the hospital is composed of salaried employees, many of whom were alarmed by the impact of changes at the hospital on the quality of care as well as on salary levels, benefits and job security. They hired an attorney and began to reach out to the PMS for help before a vote was ever cast on creating a PMS Division of Representation.

By May of 1998, the GCG decided that Geisinger’s lack of responsiveness required it to up the ante. It surveyed the medical staff’s interest in forming a collective bargaining unit and in contributing money to accomplish it. Over two-thirds of the medical staff were willing do both, according to one of the medical staff’s leaders, Albert Quiery, M.D.

The GCG interpreted the survey results as a mandate to explore the issue more seriously. Geisinger physicians consulted with the PMS, the AFL-CIO-affiliated Federation of Physicians and Dentists, and the physicians employed at a Rockford, Illinois clinic, who were also attempting to form a collective bargaining unit.

The Geisinger physicians were most comfortable with the PMS, according to Quiery, because it is a professional association, it required a no-strike clause, and because the PMS staff seemed to be anxious to gain experience implementing a program mandated by the PMS leadership.

In July of 1998, the PMS board approved a plan to provide negotiation and collective bargaining services. Under the plan, the Division of Representation would provide direct assistance to physicians who qualified for and were interested in creating a collective bargaining unit under the National Labor Relations Act. PMS would provide legal advice and the services of an organizer. In order to participate, physicians would have to agree to assist in financing these efforts, and to demonstrate both leadership and unity among a sizable number of doctors. The Division would continue to explore options for creating an independent collective bargaining unit within the PMS that could develop local chapters as needed.

On November 24, 1998, PMS Executive Vice President Roger Mecum presented to the Geisinger medical staff how the PMS was prepared to assist in forming a collective bargaining unit. Shortly afterwards, according to Quiery, the Geisinger administration "strong-armed" some physicians, transferred some programs from Danville to Hershey, and at the same time made minor concessions. As a result, support for the union receded. And the PMS’s lack of experience emerged as another obstacle to union formation.

Since then, the Geisinger physicians’ interest in unionizing has ebbed and flowed. A few Geisinger physicians met with PMS staff a few months ago, but, by all accounts, most physicians have now adopted a "wait and see" attitude.

Quiery ends his two-year term as medical staff representative on an administrative committee somewhat scarred. Because of his involvement in exploring the union option, he feels that he has been shunned by some people for committing "heinous crimes" and been accused of being unprofessional. Like his colleagues, he did not come easily to the union option. It was something "scary and foreign." But he was motivated by worries that his patients were not getting the care they needed because of inadequate staffing at the hospital. Though never an AMA member, he feels vindicated by the AMA vote to form a national labor organization.

Many physicians have left Geisinger, according to GCG attorney Michael Beautyman. He explains that physicians’ gripes with hospitals are not primarily focused on salary and benefits. They understand that their hospitals are undergoing difficult financial times, but they want to have meaningful input into hospital decision-making and preserve their clinical autonomy. When hospital administrations fail to respect their physicians and pressure them to do more with less, unionizing becomes a last resort considered by those who are eligible.

The situation is somewhat different when dealing with insurers, Beautyman believes. Issues of payment denials, slow payments and the ratcheting down of reimbursement levels have been serious sore points. Since few physicians are employed by insurance companies, however, they cannot collectively bargain with them through a union, at least not under current law or National Labor Relations Board precedent. Another AFL-CIO-affiliated union brought its answer to this problem in the summer of 1998.

Federation of Physicians and Dentists

A letter from Independence Blue Cross (IBC) was sent to physicians in late May of 1998 notifying them of 16 percent reimbursement reductions for surgical procedures, scheduled to go into effect on July 1. The letter produced a firestorm among surgeons in Southeastern Pennsylvania. Many surgeons began to seriously explore services provided by the Federation of Physicians and Dentists (FPD) to assist self-employed physicians in contracting with health plans.

The FPD is a Florida-based union founded in the early 1980s. It is currently affiliated with the National Union of Hospital and Health Care Employees; the Federation of State, County and Municipal Employees; and the AFL-CIO.

While the FPD had successfully organized publicly and privately employed physicians, it was experiencing most of its growth from self-employed physicians by utilizing the third-party messenger model.

The third-party messenger model was developed by the U.S. Department of Justice and the Federal Trade Commission in 1994 and further delineated in 1996. It allows for a third-party messenger such as a health care consultant, attorney or trade association to convey information between physicians and insurers about what fees individual physicians or group practices are willing to accept and what fees insurers are willing to pay. The messenger is prohibited from sharing or coordinating such information among competing physicians and from sharing or coordinating responses to proposals. The model is intended to improve the efficiency of individual providers arriving at fee arrangements with purchasers rather than allowing collective negotiations.

In practice, the FPD had found a way to employ the model to either increase fees or reverse fee cuts and add other contractual safeguards for physicians in Florida, Connecticut, Ohio and Delaware. Based largely on this track-record, a substantial number of Philadelphia-area orthopaedic surgeons, ENTs and urologists joined.

FPD Executive Director Jack Seddon made repeated trips to the Philadelphia area to speak to well-attended meetings of surgical specialists. Seddon detailed the successes of the FPD’s use of the messenger model, while at the same time granted its limitations. He viewed it as only a temporary tool. In the long run, the FPD was attempting to level the playing field through public education, federal legislation enabling physicians to collectively bargain with insurers, and litigation to hem in the abuses of HMOs. Seddon connected with his audiences by offering a means to resist IBC’s 16 percent cuts, notwithstanding IBC’s commanding market share.

The FPD organizing effort peaked at a medical staff meeting held at Jefferson Medical College on July 30, 1998. Michael Connair, M.D., a Yale University Medical Center orthopaedic surgeon who had organized a successful FPD chapter there, spoke to a standing-room-only crowd at venerable McClellan Hall. The atmosphere was electric.

On July 31, IBC began issuing letters saying that, because inequities may have been created by the new fee schedule, upward adjustments would be made retroactive to July 1. The upward adjustments ended up only mitigating the cuts rather than rescinding them.

Among the PMS’s activities during the IBC crisis was informing physicians that PMS believed that the FPD’s use of the messenger model violated antitrust law. At one heated town hall meeting held by the PMS in Valley Forge, then-PMS President Lee H. McCormick, M.D., was repeatedly berated for not offering the messenger model through the PMS. He began addressing the issue by asserting that the messenger model, if applied legally, provides no bargaining leverage. By the end of the meeting, he said the PMS would provide it, if that is what the membership wanted. At the October 1998 meeting of the PMS House of Delegates, a resolution to provide the messenger model through the Division of Representation was referred to the Board and a resolution for the PMS to enter into discussions with physician organizations utilizing the messenger model was adopted.

On August 12, 1998, the U.S. Justice Department filed a civil antitrust lawsuit against the FPD for orchestrating a boycott to extract artificially high fees for competing independent orthopedic surgeons in Delaware. The complaint alleged that, in 1996 and 1997, nearly all of the orthopedic surgeons in Delaware joined the FPD and thereafter acted in concert through the FPD to resist the efforts of Blue Cross and Blue Shield of Delaware to reduce their reimbursement.

The FPD denied there had been a boycott and responded with the charge that Blue Cross had engaged in a lockout of physicians by refusing to talk to an individual physician’s or physician group’s choice of an "agent." A trial is set for April, 2000, as the FPD’s attorneys and the Justice Department attempt to work out a consent decree.

Meanwhile, the FPD is saddled with the legal costs of the case as well as a cloud of illegality over its head. Seddon denies that his recruitment effort has stalled, but he grants that membership in Southeastern Pa. is stable rather than growing. The combination of the partial reversal of IBC’s payment cuts and the Justice Department lawsuit have undoubtedly slowed the momentum. The Justice Department is asking the court for an injunction against the FPD ever serving as a third-party messenger or giving advice to any physician about a payer contract.

Seddon contends that, although FPD’s conduct is within the Justice/FTC guidelines, he always expected a lawsuit. It is the necessary cost of changing the status quo—a cost the FPD is willing to pay, he says. He hastens to add that no physician members of the FPD are defendants in the lawsuit.

Seddon continues to be popular among Pa.’s orthopaedists, ENTs and urologists. At a meeting in the Philadelphia suburbs in July of 1999, Seddon held court before an engaged group of physicians from a variety of specialties. Discussion ranged from the FPD’s lobbying effort for the Campbell Bill in the House Judiciary Committee, to its sponsorship of malpractice insurance for members, to its litigation strategy, to its draft of a joint negotiation bill for Pa. The meeting became increasingly interactive as it unfolded and physicians seemed to leave the meeting energized to act for themselves and their patients.

United Salaried Physicians and Dentists

In June of 1999, another large physician union affiliated with the AFL-CIO established a foothold in Pa. The Pennsylvania Association of State Mental Hospital Physicians (PASMHP), after operating for nearly 30 years as an independent union, affiliated with the United Salaried Physicians and Dentists (USPD).

PASMHP President Sara Ann Warren, M.D., explains that, while her union had been able to operate effectively without affiliations in the past, further reductions in the state’s provision of health care services have eroded union membership from over 600 to 300, requiring the union to become more aggressive. Philadelphia labor lawyer Leonard Spear will continue to serve as the union’s executive director with his firm handling collective bargaining and grievances, while the USPD will provide a full-time representative to speak to physicians at all of the state facilities and to go to grievance proceedings. USPD will help the union with public relations and with recruitment within the state system as well as outside of it.

The additional resources provided by USPD do not come without a cost, however. Annual union dues will increase from $196 to $650, phased in over four years, Warren said.

PASMHP Executive Director Leonard Spear said the USPD’s help in organizing other employed physicians in Pa. is an important benefit of the affiliation because the number of state-employed physicians is shrinking. PASMHP will have the right of first refusal on any new collective bargaining units organized by the USPD in Pa., Spear noted.

Several years ago, the USPD was itself an independent union confined to the New York-New Jersey region. In 1997, USPD affiliated with the AFL-CIO’s third largest union: the Service Employees International Union (SEIU). USPD then successfully organized physicians employed at the largest network of health clinics in Seattle, Washington and at Lincoln Hospital in the Bronx into collective bargaining units, doubling its size from 1000 to 2000 members. In March of 1999, another New York-based union founded in 1973, the Doctors Council, affiliated with the SEIU. The USPD, the Doctors Council, and the Committee of Interns and Residents (CIR), yet another New York-based union that affiliated with the SEIU in 1997, formed the National Doctors Alliance, a loosely structured umbrella organization for physician members of SEIU-affiliates totaling over 15,000.

USPD Executive Director Eric Scherzer cites the increasingly political nature of health care as the reason for the consolidation of formerly-independent physician unions under SEIU. He complains that even the most effective collective bargaining unit is tremendously constrained by health care policy developed by federal and state governments; such policies could be reshaped by doctors, working together with the other 600,000 health care members of SEIU. The National Doctors Alliance hopes to become the national doctor’s voice, Scherzer said.

At a press conference in March, 1999, National Doctors Alliance President Barry Liebowitz, M.D., said that his major agenda item is to organize every employed physician in the country utilizing a budget of $1 million a year. USPD’s Scherzer estimates that there are 110,000 unorganized post-residency physicians eligible to form collective bargaining units and 90,000 unorganized residents and fellows who would become eligible if CIR’s challenge to classifying residents as students rather than employees is successful.

CIR’s National Labor Relations Board challenge on behalf of Boston Medical Center residents was a catalyst for another significant achievement: CIR’s formal partnership agreement with the California Medical Association (CMA) announced in March, 1999, remains the only formal relationship between organized labor and organized medicine. CMA was one of two state medical societies that submitted an amicus brief in support of the CIR case. Their shared position supporting collective bargaining rights for housestaff led to an agreement for additional cooperation in the future, according to a CIR written statement.

CMA and CIR will develop a list of strategies aimed at encouraging dual membership and will create a coordinating committee to monitor and evaluate joint programs. CMA and CIR have also pledged to work cooperatively in areas of legal, legislative, reimbursement and regulatory advocacy. The agreement, however, affirms the two organizations’ autonomy and acknowledges that they will occasionally "agree to disagree" on certain issues or actions.

One area of probable conflict is on the use of strikes. While the AMA Division of Representation and some AFL-CIO affiliates such as the OPEIU have forsworn physician strikes, SEIU’s National Doctors Alliance retains their use. Strikes would be an infrequently used, last resort requiring the consent of a large majority of members of a collective bargaining unit, according to an SEIU written statement. And if invoked, a strike would never be used in a way that would threaten the well-being of patients, it states.

Future of Unions in Pa.

With three AFL-CIO affiliates—OPEIU, FPD and USPD—and the PMS and AMA interested or prepared to organize Pa. physicians, it would appear that the supply currently outstrips the demand. But three forces may conspire to make Pa. fertile ground for physician unionization: increasing physician frustration with managed care and the corporatization of health care, increasing numbers of physicians becoming salaried rather than self-employed, and ongoing attempts to broaden collective bargaining eligibility for residents and self-employed physicians.

The three AFL-CIO affiliates have adopted distinctive approaches.

The OPEIU has attempted to affiliate with professional associations, adding their relatively low dues of approximately $90 to the dues collected by the associations. It provides lobbying services at the state and national level for health policy change, promotes changes to improve the doctor-patient relationship with trustees of ERISA and union Taft-Hartley plans, and uses the leverage of organized labor to get members on insurance panels. The OPEIU has attracted 20,000 podiatrists, optometrists, chiropractors and other medical professionals, but it has yet to make any deals with medical societies. A 3000-member New York City IPA, NYMD, joined in 1996. Since then, there have only been notable near-misses such as with the Philadelphia County Medical Society in 1997 and with the Florida Medical Association in 1998. Now, OPEIU is attempting to forge deals with several Florida county medical societies and some Pa. state specialty societies, according to Pennsylvania Podiatric Medical Association Executive Director Michael Davis.

The FPD has focused its Pennsylvania efforts on the use of the third-party messenger model for self-employed physicians, although it has organized 1000 employed physicians in other parts of the country into collective bargaining units. Its base of approximately 7500 self-employed physicians positions it to take immediate advantage of expansion of their collective bargaining eligibility, as they are doing now in Texas with FPD members there. But its ability to continue on this path is dependent on the successful resolution of the Justice Dept. lawsuit. The support afforded by the NUHHCE is a strong asset, as is the affiliation with AFSCME, the second largest AFL-CIO union. If more coordination can be forged with the 6000-member Union of American Physicians and Dentists, which affiliated with AFSCME in 1997, and with NUHHCE’s other two physician locals, AFSCME’s physician unions will be formidable.

The USPD, along with CIR and the Doctors Council, is focused on employed physicians. Pa.’s only physician collective bargaining unit is an affiliate. The National Doctors Alliance boasts over 15,000 members, affiliation with the largest health care union (SEIU), and a million-dollar organizing campaign. The CIR has a commanding share of the country’s unionized residents and is positioned to gain a lion’s share of newly eligible residents if its challenge of NLRB precedent is successful. And, if it can retain graduating residents within the National Doctors Alliance as they enter other employment, it will have an organic method of gaining new collective bargaining units. Its partnership agreement with the California Medical Association is another important achievement. But with all these achievements and potential, most of the National Doctors Alliance’s impressive numbers have been gained through the consolidation of existing unions. To be ultimately successful, it will have to gain most of its growth through the organizing of new collective bargaining units.

The varying approaches of the three unions provide the potential for them all to organize physicians in Pa. without directly competing with each other. The AFL-CIO charter is designed to limit direct competition between affiliates, although the OPEIU, FPD, UAPD and USPD competed against each other for an affiliation with the Florida Medical Association in 1998. Any sort of real collaboration of physician unions throughout the AFL-CIO is not likely to occur, at least in the short term.

All three unions have expressed interest in collaborating with the AMA and the PMS, which in some ways are the real wild cards in the process. The AMA leadership has been dragged, kicking and screaming, to the point of forming a national labor organization. It has forsworn collaboration with organized labor and has expressed no interest in recruiting members to their labor organization. Once an organization is formed, however, it could take on a life of its own.

The PMS is prepared to assist physicians in forming collective bargaining units by contracting-out with either a union organizer and labor attorney or an existing union on an as-needed basis, according to PMS General Council Kenneth Jones. If and when a number of collective bargaining units are formed, the PMS would then bring the operation in-house. But for the PMS, like the AMA leadership, unionizing is a tool of last resort.

While organized medicine may now be perceived as the labor organization of choice for those seeking a professional alternative to organized labor, physicians will eventually flock to the organization that shows the best results.