Trouble in Dirty Water

It's 5:30 PM on a Monday at Waterbury Hospital and I am one of the technicians who have been asked to attend a special meeting with the CEO of the hospital, Darlene Stromstad. We meet in the Bizzozero Conference Center. There are enough chairs for about fifty attendees, there are cold-cut wraps and pizza and soda to substitute for our dinner. There are only four of us in attendance. Darlene is dressed in a sharp black pantsuit. Per recommendation by the hospital's attorney she reads prepared remarks and then takes questions. There is awkward, uncomfortable silence. This is the fifth meeting that we have attended this month.

In two days there will be a vote on whether the 120 + hospital technicians -- myself included -- will join the CHCA nurses union that currently represents the hospital nurses and patient care assistants (PCAs). Darlene and hospital administration is pushing hard -- very hard -- for the technicians to vote "No" on July 24th.

Stromstad has been CEO for two years now. She was hired specifically to foster a merger between Waterbury Hospital and a private health company. Her first attempt to have the hospital acquired by Premier Healthcare was met with strong resistance by the unions at Waterbury Hospital along with several social groups. Waterbury Hospital is one of two Hospitals located in the city of Waterbury, Connecticut. The other is Saint Mary's, which is owned by the Catholic Church. Premier Healthcare's plan (or so we were told) was to acquire both hospitals and combine them into one larger, more up-to-date facility. You see, Waterbury is too big and requires too much care to eliminate one of the hospitals, but there is not enough business to sustain both simultaneously, so they are both in trouble and both looking for investors. The Saint Mary's acquisition was met with resistance due to the stipulations that the Catholic Church -- which was to keep a stake in the hospital -- put on the purchase, namely regarding the use of the hospital for abortions and birth control coverage for employees. After pushback from the government and the unions, Premier bailed on the project and both hospitals were again looking for investment capital.

Waterbury Hospital has a particularly bad situation. Times have been bad and indicators all say they are about to get worse. Waterbury is a tough sell: approximately 65 percent of its patients are supported by Medicaid and the remaining patient base comprises a combination of Medicare, private insurance, or just plain old no insurance at all. In cases such as this, Waterbury Hospital treats the patient and then tries to supplement the cost with grants or through the government. However, Governor Dannel Malloy recently cut Medicaid and Medicare reimbursements, which Stromstad says is costing the Hospital about $450,000 a week. Sound ridiculous? Not really. To stay on the floor I work costs about $5000 per day. I work on the psychiatric floor and I can count on one finger the number of patients we have with private insurance and the rest are Medicaid, Medicare, or nothing. We are constantly at capacity of 29 patients. You do the math. In May in an email to her employees Stromstad wrote, "Waterbury Hospital has already experienced a cut of $1.3 million in state funds for the budget year we are in. As of July 1, the State budget includes an additional 4.13 million in cuts from our Medicaid reimbursement on the same level of volumes, which will add to our losses. On top of that, the federal sequestration has resulted in an approximate $900,000 decrease in reimbursement this year."

Waterbury Hospital had already experienced a few rounds of layoffs the previous year. In June, Stromstad sent out another email informing employees that the equivalent of 83 full-time positions will have to be eliminated in order to stay within budget. "About half of the positions being eliminated are presently not filled. The reductions are being achieved through a variety of means, including the consolidations of positions, decreases in assigned hours, attrition and layoffs. They extend to all levels of the hospital -- clinical and nonclinical, union and nonunion, management and support staff, both full and part-time."

The city of Waterbury itself was formerly an ammunition manufacturing hub, was visited by President John F. Kennedy, and was a production powerhouse. Now it has the second highest unemployment rate in Connecticut, a functional literacy rate of 54%, and a hollowed-out core of abandoned factories, houses, and sky-high property taxes. The city is in financial trouble, the citizens are largely hopeless, and drugs and mental illness run rampant throughout. The locals have nicknamed Waterbury the "Dirty Water." Things are not well in the Dirty Water.

Enter Vanguard Health Systems, a company based in Tennessee that is interested in acquiring hospitals in the state of Connecticut. Vanguard is a private, for-profit health company, and that can spell trouble in a deeply liberal and Democrat-entrenched state like Connecticut. Waterbury is currently a non-profit hospital. In fact, it is so non-profit that it has endured massive losses since 2006. That's about as non-profit as it gets. Governor Malloy, on the other hand, has played his assigned role of President Obama's hand puppet, even implementing a new healthcare system for the federal employees that mimicked Obamacare and subsequently blew up in his face, costing far more than his administration's estimates. Connecticut is rated one of the worst states for business in the country, yet Vanguard remains interested... until now.

In order to facilitate the acquisition, legislation had to be drafted to create a "governance structure for for-profit hospitals modeled after a law passed in 2009 allowing hospitals and health systems to take part in nonprofit 'medical foundations' as a way to employ doctors. Without it, supporters of the 2009 law said, hospitals would have trouble acquiring physician practices because of federal laws, including an anti-kickback statute. The structure is key to a major change under way in Connecticut's health care landscape as doctors in solo or small practices give up independent practice to join large provider networks run by hospital systems."

As we sit with Darlene on the fourth floor of Waterbury Hospital, she tells us in a voice exasperated with anger how the governor's office worked with Waterbury Hospital to draft the legislation and pushed it through the last legislative session in June. This was legislation worked by Malloy's own office, however on Monday July 8th union representatives visited Governor Malloy. On Tuesday the legislation easily passed both state house and senate and on Wednesday, Malloy vetoed the bill. Darlene, with anger in her voice, tells how she was on the phone with a Vanguard representative when the rep said that he just received a text saying Malloy had vetoed the bill. Darlene thought it was impossible, but it was true. The unions had pushed hard.

Waterbury Hospital is currently home to two unions, the CHCA and the 1199. However, the CHCA is not just a benign collection of RNs and PCAs. Rather it is part of AFL-CIO headed by Richard Trumpka, a union with massive political influence, which came to bear on Governor Malloy and Waterbury Hospital.

Sensing that the hospital was in a bad situation, CHCA moved suddenly to try to unionize the hospital technicians. Only numbering about 120 total, they are the only nonunion employees in the hospital. Darlene and the administration worry that one more straw will break the camel's back and cause Vanguard to abandon the acquisition in the face of so much social and political pressure. Connecticut is a deeply liberal state. There is only one hospital in the state that is for profit but even Yale is rumored to be looking for investors as ObamaCare looms in the very near future. Vanguard has its eyes on other hospitals as well but, as one columnist wrote, "How would for-profit corporation squeeze savings out of operations better than hospitals could do now?" "What about accountability to a hospital's community through a board of local residents? Is that important or can it be given up in favor of a national corporate board of directors?" "Or, since hospitals in many communities are more or less monopolies, if a hospital is owned by a for profit corporation, would money be drained from local health care only to be funneled as profit to a distant corporate headquarters, diminishing care without any recourse for local patients other than to move away?" To be sure, his questions hardly make any sense, except for one, which I posed to Darlene that evening: "How does Vanguard expect to make money in Waterbury when your customer base is largely Medicaid and Medicare which only pay a percentage of costs?" It was something I had been curious about for a while.

Clearly the client base directly in Waterbury will not change, barring some massive change in the economy and culture of the city. However, the investment of capital in the hospital will allow for expansion in outpatient care to wealthier areas in surrounding towns. Waterbury is located about halfway between Danbury and Hartford, each of which boast patient bases which are largely private insurance and therefore pay enough for the hospitals to remain relatively healthy (though they are cutting staff as well). However, as Waterbury began to falter, it allowed Danbury and Hartford hospitals to take over outpatient services the surrounding areas of Southbury, Cheshire, and Wolcott, to name a few. Outpatient services work with local doctors such as OBGYNs who then work with the hospital and refer their patients to hospital for inpatient services such as childbirth. When Waterbury began to run into trouble, the hospital gave up fighting for these outpatient services in the surrounding wealthier towns and lost a large amount of business -- Darlene claims up to 50 percent -- to competing hospitals that already had strong income bases. Hence, the hope is that Vanguard would not only invest in updating equipment and services but also help Waterbury Hospital branch out into other towns through doctor affiliations and outpatient services. This will then increase private insurance payments that will raise revenue for the hospital and improve care for the community.

The unions don't see it this way, however, and not only did they influence Governor Malloy to veto the legislation that his own office helped draft, but now the union is trying to acquire the last bastion of free employees in the hospital -- the technicians. Hospital administration has made the point even if unionization of the technicians goes through it would still be at least a year before a contract would reasonably be passed. Administration is asking for the technicians to delay on joining the union for another year to allow the Vanguard acquisition to go through without any further bumps in the road. "We're only asking for a year. After the acquisition if the techs still want to join the union that issue can be revisited," she says.

Sounds like a reasonable request to me, as I sit only a few feet from the woman whose face was plastered across the front page of the Waterbury Republican as one of the highest paid hospital CEOs in Connecticut, her annual salary and benefits coming in at over $500,000. My wife and I can barely pay the bills. The union will take an additional fifty dollars a month out of my pay. Darlene acknowledges this and points out that the union leaders take salaries of well over one million per year annually. "I don't make a million dollars a year," she says, "and the difference is that you don't pay my salary, but you will pay theirs."

The scurrilous nature of the union is also part of the issue at hand. Vanguard has offered to buy out the union pensions for $17 million, which would result in the loss of pensions for some of the RN's and PCA's. Why? Because the money they have already put into their pension funds has been distributed to other retirees and, in essence, is gone. "Why doesn't the union just give you back the money you paid in a lump sum when they get the buyout?" I ask a pro-union coworker. "Well, because they don't have it," she says.

For my part I have been vociferously anti-union from the beginning, when I was suddenly surprised to learn that there was a push for the techs to unionize. I failed to see the purpose of the unions. Despite the union, RNs and PCAs still get laid off. Despite the union, middle management can still do as they please even when RNs file grievances against them. When layoffs do occur, the union allows senior staff to "bump" newer employees out of their positions to other positions or, in many cases, straight to the unemployment line. It allows someone who may actually be terrible at their job to replace someone new who is potentially quite skilled at their job. It is all based on seniority not merit. I would like to think that the merit of what I do on my unit would keep me employed when cuts come around, but I've only been employed three years, so I'm a low man on the totem pole. So I would be paying $50 a week for nothing except that every few years someone would enter to negotiate salary on my behalf.

There is also the prospect of strike. While the contracts generally include a "no-strike" agreement (which is odd because it gives away the only power that a union would potentially have), when the contract is up, the union can call a strike. Myself, and many others I know, could not afford to miss a couple day's pay, let alone weeks. The last strike at Waterbury Hospital was in 1986. The union paid its members thirty dollars a week to picket twenty hours a week. Many nurses lost their positions when the union eventually negotiated a "closed shop" agreement rather than amnesty for the employees who stayed out on strike. Therefore many lost their positions to "scabs." In the event of a strike I would have to cross the line to feed my family, I have no choice. During the strike of 1986, some of the RNs tell me, people who crossed came out of work to find their cars had been vandalized, and sometimes even their homes. Those that crossed would sometimes park in another lot in town and the hospital would bus them in vans with covered windows to hide their identities.

I don't need that kind of stress. I just want to go to work and come home and try to make my way. I have made this clear but I have a sneaking suspicion that I'm in the minority and that a number of my fellow techs see the union as an easy way to get higher pay and stick it to management. However, as we sit together in the conference center, Darlene tells us that the future of Waterbury Hospital is in jeopardy barring some sort of large influx of capital from someone or somewhere. Strong businesses don't repeatedly seek out buyers. Strong businesses don't have their highly-paid CEO sit with four techs in a large conference center at 5:30 PM on a Monday giving out turkey wraps and pizza. Strong companies turn a profit. Why that is more frightening to the unions and to Governor Malloy than a company that is in the red I will never understand.

The union vote was held July 24, however it is currently in dispute and the results are not known. The NLRB will be ruling on the vote soon.