When Spectrum Health merged with Beaumont Health to create Corewell Health in 2022, the West Michigan company stepped into a hornet’s nest.
Hospital worker morale had been swamped by then-leader John Fox under cost-cutting and restructuring measures. Several high-profile physicians left as Fox sought to “right-size” the operations and find a buyer. And the Michigan Nurses Association had been trying to organize nurses at Beaumont Royal Oak since at least 2019.
By the time Corewell was formed, the relationship between administrators, clinicians and staff was broken and, apparently, has not improved.
Now Corewell faces the third-largest union organizing effort in the nation since at least 2019, behind the organizing of 40,000 workers at Disney World in 2021 and the organizing of 15,500 workers at AT&T Mobility in Ohio, according to an analysis of data from the National Labor Relations Board.
Beaumont nurses claim diminishing working conditions before and since Corewell was formed out of the merger, while the Grand Rapids- and Southfield-based health system is contending with rising costs and large payroll from the legacy Beaumont operations.
The result of the vote by 9,168 nurses across eight former Beaumont hospitals next month could trigger one of the nation’s most powerful union takeovers of health care and create a further ripple across the sector in the state.
Months of sparring
The International Brotherhood of Teamsters began a quiet campaign at Corewell East, which is the group of former Beaumont hospitals in Southeast Michigan, roughly 11 months ago, said Kevin Moore, president of Teamsters Joint Council 43.
“These nurses have tried to organize four different times,” Moore said, referencing the MNA’s previous attempts. “It never got to the finish line because it’s a lot of work, that’s a lot of nurses to organize. We have strong nurses and we built a very quiet campaign for the first three months. (Corewell) didn’t know we were coming. It’s out now and we’re going full steam.”
Moore said the organizing effort has taken so long because it’s organizing all Corewell East locations — hospitals in Grosse Pointe, Troy, Royal Oak, Farmington Hills, Wayne, Taylor, Trenton, Dearborn and the former Beaumont headquarters in Southfield — at once. The MNA tried to start with just the nurses in Royal Oak.
Since then, the union and Corewell have been sparring. Corewell has hired third-party consultants to address the bargaining unit effort by the nurses, people who Moore and two nurses who spoke to Crain’s on the condition of anonymity called “union busters.”
Posters and flyers have circulated across Corewell East hospitals informing the nurses of the potential dangers of unionizing, including the high fees the union charges.
“The Teamsters charge 2.5 times your hourly rate each month. If you make $38 per hour, you’ll owe them $95 every month. This high monthly fee doesn’t include the potential for additional initiation and assessment fees or fines,” a poster posted online from Royal Oak reads. “The Teamsters are trying to divide us. That is a preview of the culture the Teamsters want to create.”
A nurse at the Royal Oak hospital told Crain’s that the third-party consultants give individual 30-minute talks to the nurses about unionizing.
“We believe it is important to ensure our team members have all the information they need to make an informed decision,” Mark Geary, senior communications director for Corewell, told Crain’s in an email. “We have made external experts available to connect with our nurses.”
Moore said the Teamsters plan to file a labor complaint against Corewell in the coming days with the National Labor Relations Board. The union has already filed at least two complaints against Corewell this year, for alleged coercion and threats to its organizing efforts.
Those cases remain open with the nation’s labor agency.
Workforce discontent pre-dates Corewell
One of the nurses who spoke with Crain’s said the unionization effort is a result of years of mistreatment by administrators, predating Beaumont’s merger with Corewell.
“We didn’t think we needed a union at the old Beaumont; it was run by the doctors and nurses,” the nurse said. “Not that we didn’t have administrators, but they always listened to the medical professionals. Then John Fox took over Beaumont and everything changed.”
Fox was appointed CEO of Beaumont Health in March 2015.
By 2020, Fox was facing rampant calls for his resignation, including a no-confidence vote by physicians that asked the board to remove him. Those physicians alleged patient care had deteriorated under Fox as the top executive of the eight-hospital system began cutting costs to make a merger more attractive.
Fox first tried to merge Beaumont with Akron, Ohio-based Summa Health in 2019, but called off the deal in May 2020, blaming the COVID-19 pandemic.
Meanwhile, widespread dissatisfaction culminated in two negative physician and nurse surveys. In June 2020, Beaumont signed a letter of intent to merge with Advocate Aurora Health, a 28-hospital system in Illinois and Wisconsin with $12 billion in revenue, and the doctors feared a loss of local control.
That deal, too, was scrapped, once again with administrators blaming the pandemic.
The clinicians appeared to take a different tact when Fox announced the merger with Spectrum and largely supported the deal, with Fox leaving when the deal was completed in February 2022.
But the nurses told Crain’s the conditions have largely not improved under Corewell.
“We never have a seat at the table,” the nurse said. “Our pay is terrible, we get no benefits and our co-pays are insane. But Priority Health [Corewell’s in-house insurer] made record profits again. Meanwhile, they are cutting staff.”
Geary told Crain’s that Corewell is proud of the compensation it provides to nurses and is commensurate with peers.
“We are proud to offer competitive pay and benefits to our team members, regardless of where they live,” Geary wrote. “Our pay and benefits are aligned to national data.”
Labor votes can lead to higher overhead costs
At stake for Corewell is runaway labor costs at its former Beaumont hospitals. As the nurses pointed out, doctors and nurses enjoyed a level of freedom at the old Beaumont and the health system’s longstanding public image was that it hired the best and brightest among its doctors and nurses.
That costs money.
Labor costs are simply higher in Southeast Michigan than in Grand Rapids, largely due to far more competition than there is on the west side of the state.
Shortly after the systems merged, Beaumont and its eight hospitals had higher expenses than Spectrum’s 11 West Michigan hospitals. Between Feb. 1 and June 30, 2022, Beaumont spent $1.21 billion on wages and benefits, compared to $980 million for Spectrum West Michigan during the first six months of that year.
Corewell has since merged its reporting, eliminating the ability to compare its West and East operations. It is the largest health care system in the state and reported $8.3 billion in net patient revenue in 2023, up from $7.5 billion in 2022, according to data compiled by Crain’s.
Corewell West, which holds market share domination in West Michigan, does not have a unionized workforce. But unions in the health care sector in metro Detroit have grown tremendously since the COVID-19 pandemic.
At least three new unions have cropped up at Michigan Medicine in Ann Arbor in recent years. The system just avoided a strike by the 2,700-member SEIU Health Care Michigan union earlier this month after reaching a deal. Another union, The United Michigan Medicine Allied Professionals and its 4,600 members, authorized a strike in a vote last week.
Grand Blanc-based McLaren Health Care also reached a deal earlier this week with its nurses union at its Flint hospital after it sued the union and two of its own employees over allegations that the union encouraged the public to not seek care at McLaren Flint during contract negotiations.
And earlier this year, emergency room doctors at Henry Ford St. John Hospital — formerly Ascension St. John — in Detroit walked off the job in a one-day strike.
Since 2021, there have been eight strikes and 27 labor protests in Michigan in the health care and social assistance sector, according to Cornell University’s Labor Action Tracker. And this year, the National Labor Relations Board has received petitions for labor representation from groups of clinicians and other workers at more than 15 health care facilities and service providers in Michigan.
Jeremy Millroy, a professor of history and labor history expert at Wayne State University, said the rise of unionization in the sector is a response to corporate profitability and union wins in other sectors.
“Corporate profitability is high, but these gains are not getting shared by workers, who have also been squeezed by inflation and price gouging over the past several years. Workers are opting to organize to achieve their goals, and are somewhat supported in doing so by a tighter labor market in recent years,” Millroy said to Crain’s in an email.
Major health care companies have been seeing profits.
“At Kaiser Permanente, where over 75,000 workers struck last year, the company had reported over $24 billion in profits in the previous five years. Corewell reported $170 million in operating income the first six months of the year, which is up,” Millroy said in the email. “Corewell and Kaiser are both nonprofit companies, which means they have significantly less tax burden than other major employers.”
Millroy said well-publicized victories by unions — like the UAW, SAG-AFTRA and the writers’ guild in Hollywood and Starbucks Workers United — have inspired workers to organize.
The Corewell nurses will vote to organize under the Teamsters Nov. 12-14. As of now, the vote will occur in person, something Moore said is unfair and an attack by Corewell, which requested the vote be in-person versus by mail.
“A nurse involved in four surgeries is expected to leave a surgery to vote? That’s not fair,” Moore said. “(Corewell) will do anything they can to defeat our effort. Mail-in ballots is the only fair way to have this election.”
Geary said the in-person vote is the right way to do it and that the organization believes the effort will fail.
“We respect our team members’ rights to explore joining a union, however, we believe our ability to provide high quality care to our patients and maintain a positive work environment is best achieved through a direct working relationship with our nurses,” Geary wrote. “We do not believe a majority of our nurses want to be unionized.”
By mid-November, Corewell will either be stung by the growing union effort across Southeast Michigan or save itself from the rising costs of motivated labor.
Source: Crains Grand Rapids
