About LMP

The Case for Partnership

Labor relations as operational strategy to provide strength and security at Kaiser Permanente

In June 2015, Kaiser Permanente wrapped up the largest private-sector labor contract of the year—a tentative agreement covering 105,000 health care workers. More than 150 union and management representatives sat next to each other to hash out differences and shared interests through interest-based bargaining.

We believe our experience can serve as a model for other organizations and unions looking for new and better ways to do business—not just at the bargaining table but in the workplace, where we partner with a coalition of 28 local unions.

Our national agreements (this is our fifth since 2000) go well beyond the scope of traditional collective bargaining agreements. They cover not only wages, benefits and working conditions but also workforce and community health, workforce planning and development, performance improvement, and union and organizational growth. And we negotiate in a highly compressed time frame—in this case, just four, three-day rounds of formal bargaining.

A better way to bargain

The bargaining process and its outcomes have been transformative. Linda Gonzalez, who helped facilitate our first National Agreement and is now director of mediation services for the Federal Mediation and Conciliation Service, Southwest Region, noted how impactful the interest-based approach can be:

At the table, everyone has an equal right to speak and explain their interest. There’s more open dialogue and sharing of information. … It’s taken Kaiser and the unions a lot of hard work to get where they are. [But] to resolve difficult issues in partnership is a strength.

We have leveraged that strength in many ways over the years. Our Labor Management Partnership has met the goals set forth in our agreements since the beginning: to “improve the quality of health care, make Kaiser Permanente a better place to work, enhance Kaiser Permanente’s competitive performance, provide employees with employment and income security and expand Kaiser Permanente’s membership."

Our National Agreements commit us to operating principles that you won’t find in most labor contracts:

The parties believe people take pride in their contributions, care about their jobs and each other, want to be involved in decisions about their work and want to share in the success of their efforts. Market-leading organizational performance can only be achieved when everyone places an emphasis on benefiting all of Kaiser Permanente. ... Employees throughout the organization must have the opportunity to make decisions and take actions to improve performance and better address patient needs.

Power of partnership

Interest-based bargaining doesn’t guarantee success. It works for us because our partnership works.

The partnership between Kaiser Permanente and the Union Coalition came about in 1997, in a challenging environment. The company had a long and close history with the labor movement. But amid growing market pressures and labor unrest in the 1980s and ’90s, we were at a crossroads. Most of the local unions representing KP workers formed the Coalition of Kaiser Permanente Unions to launch a unified corporate campaign.

Facing what would have been a mutually destructive strike, the leaders of both parties took a chance on an alternative approach. They agreed to:

  • Work collaboratively to improve the quality and affordability of care for the patients and communities we serve
  • Help Kaiser Permanente lead the market in health care
  • Involve unions and individual workers in workplace decisions
  • Provide job security and be the best place to work in the industry.

Solving tough issues

Today it is the largest, longest-running and most comprehensive such partnership in the country. It covers 80 percent of our represented workforce and includes 43 local contracts, in addition to the national agreement. It has delivered industry-leading contracts, and helped Kaiser Permanente achieve industry-leading quality, solid growth and a culture of collaboration.

In short, our partnership is more than a labor relations strategy, it’s an operational strategy that provides strength and stability for Kaiser Permanente and our workforce, and better care and service for our members, patients and customers. It provides an infrastructure for continuous performance improvement and a way to better resolve difficult issues.

For example, during the Ebola crisis of 2014, health care providers and members of the public were concerned about how to best control spread of the disease. Kaiser Permanente, our union partners and the Centers for Disease Control and Prevention stepped back from the fear and misinformation that prevailed elsewhere. We worked together to develop training processes, educate people and agree on steps to ensure the safety and compensation of employees involved in caring for patients with the Ebola virus. Two of our hospitals were among the first in the United States to be recognized as part of the nation’s Ebola preparedness and response plan.

Frontline teams lead change

Day-to-day partnership is most evident in more than 3,400 unit-based teams—our term for the natural work groups that deliver care and service. Team members are trained in performance improvement techniques to spot opportunities, conduct small tests of change, assess results and implement solutions. They provide a new level of learning and decision making about the quality of their work and how to do it better.

UBTs are co-led by a union member and the manager or supervisor. In clinical settings they include physicians. We track the performance quarterly of every team, based on jointly set measures of performance, and we set aggressive goals for the number of teams to reach high performance, measured on a 5-point scale.

Seventy percent of them are rated high performing. That’s important because our data show that high-performing UBTs get better outcomes on service, quality, safety, attendance, patient satisfaction and employee satisfaction.

New tools and skills

Amy Edmondson, Novartis Professor of Leadership and Management at Harvard Business School, has studied Kaiser Permanente’s model of teaming and offered this assessment:

Unit-based teams are a way to be entrepreneurial and a way to build greater accountability by those on the front line. The teams push people to brainstorm, to be attentive to what they see and to put their own experience to good use. The teams have the opportunity to identify challenges and they have tools and skills with which to work, but it’s up to them to put them to good use to make a difference for patients.

Our teams now have more than 7,700 frontline improvement and innovation projects under way. To align local team efforts with the organization’s broader strategic goals, all projects are focused on one or more points of the Kaiser Permanente Value Compass – a guidepost that shows our four shared goals of best quality, best service, most affordability and best place to work, with our patients and members at the center of all we do.

Kaiser Permanente Value Compass

Value Compass

About 35 percent of these projects are focused on reducing waste or improving affordability. And 267 of those projects, produced joint savings of $10 million in 18 months; potential savings are much more. Twenty-eight percent of projects are focused on service enhancement. Here’s a snapshot of improvement projects conducted at each point of the Value Compass:

  • Best quality: A medical imaging team worked across departmental lines to ensure that patients who visited the medical office for a flu shot, and also were due for a mammogram, could get one promptly, many within 20 minutes.
  • Best service: A cross-functional team of service center workers redesigned work processes to handle incoming calls in the wake of the Affordable Care Act. The team cut the number of customer handoffs by 60 percent and reduced mean processing time for members’ issues from 26 days to three days.
  • Most affordable: An inpatient pharmacy team launched a cost-reduction effort that is saving more than $600,000 a year by better managing inventories, alerting physicians to less costly equivalent drugs and reducing drug wastage.
  • Best place to work: As part of our voluntary workforce wellness program, 62 percent of eligible employees – more than 80,000 people – participated in a confidential health assessment to identify potential health risks. 

Getting measurable results

We know our strategy is having an impact on organizational performance and the workplace experience. Our 2014 employee survey showed strong correlations between several measures of employee engagement and job performance.

Departments that scored high on an index of 18 measures of workforce effectiveness (including things like taking pride in the organization, information sharing, understanding of goals and being held accountable for performance) reported significantly better results in service, quality, workplace safety and attendance. For instance:

  • 9 percent higher patient satisfaction scores
  • 18 percent fewer lost work days
  • 41 percent fewer workplace injuries
  • 91 percent fewer bloodstream infections in at-risk patients

In addition, members of high-performing unit-based teams are far more likely to say they have influence in decisions affecting work, are comfortable voicing opinions, and feel co-workers are respected despite differences.

Higher job satisfaction also contributes to significantly lower employee turnover. In California, for instance, our turnover rate for all hospital-based employees ranges from 6 percent to 8 percent, depending on the job type – versus the 2014 industry average of 9.4 percent statewide reported by the California Hospital Association.

Union Coalition members and Kaiser Permanente also collaborate on many issues rarely open to union participation. For instance:

Workforce planning and development: We invest heavily in workforce training and development – and we develop and implement most of that work jointly. For instance, a union-management Jobs of the Future Committee in Southern California is identifying emerging technology, assessing the impact on workers, managers and physicians, and developing training plans and career paths. More such efforts and investments are under way.

Market growth: Bringing together union members and Kaiser Permanente sales and marketing teams, our joint growth campaign helped win, expand, win back or retain 33 accounts covering 125,000 Kaiser Permanente members in 2014.

Meeting organizational challenges

Our partnership is not perfect. It can stretch us to engage and educate our many stakeholders, and find time to solve problems and improve work processes in the course of day-to-day operations.

But in my experience, the biggest challenge is spreading innovation – facilitating the exchange of ideas and the adoption of successful practices from one team, medical center or region to another. We know that new initiatives can take root faster and more consistently if they’re modeled on a proven concept – especially when they are championed by our own work teams. Variation can be a plus when you’re looking for new and better ways to do things; when you’ve found the best way, you need to make it a work standard.

We recognize and spread success by communicating with teams regularly in multiple formats; through peer consultants and sponsors in every facility; a system-wide database that tracks teams’ tests of change and outcomes; and UBT Fairs, where teams share their findings in person.

Keys to success

Our Labor Management Partnership is now in its 18th year, and we are still learning how to take it further. We continue to believe it can be a model for labor relations and health care delivery. Four factors in particular are essential to success:

  • Develop leadership at all levels: Since its founding, our partnership has thrived under three different Kaiser Permanente CEOs and three different Union Coalition executive directors. Change is not sustainable if it depends on one top leader. Frontline and mid-level leadership, on both the management and union side, is key. We train for partnership at all levels, and have found that interest-based problem solving and bargaining are powerful learning development tools for up and coming leaders.
  • Build trust: To work together, partners must trust one another. That trust must be earned, and is established over time. It will be tested, but the building blocks are well known: Do what you say you will do. Honor your commitments. Treat others with respect and deliver results.
  • Measure results and share data: We set goals and track performance for all our teams. We share business and financial data with our partnership unions in bargaining, and share departmental and unit-level results with teams working on performance improvement projects. Teams can’t succeed without good information upon which to set clear expectations.
  • Create a shared framework: Our workforce is diverse in every way – demographic, geographic, professional and technical. We also have different (and sometimes competing) needs, interests and concerns. But we share a desire to make our members’ and patients’ lives better. The Value Compass – with the member and patient in the center – provides a common touch point that we use to set priorities and guide decision making.

Our union and organizational leaders know how to do business in traditional, more adversarial labor relations settings. We’ve done it. We choose to work in partnership – not because it feels better (though it does) or because it’s easier (it’s not). We do it because it gets results – for the organization, the unions and workers, and the members, patients and communities we serve.

It’s time to look beyond labor relations and find new ways to innovate and engage teams. Our leaders took a risk 18 years ago to listen, understand and work together. It proved to be better way to deliver health care and achieve our social mission.

This article was originally published in “Perspectives on Work,” the magazine of the Labor and Employment Relations Association (LERA), Volume 19. Reprinted with permission. For more information, visit LERAweb.org.

Also see a PDF of the original article, with additional information about Kaiser Permanente and the Labor Management Partnership.

Unit-based teams are a way to be entrepreneurial and a way to build greater accountability by those on the front line.

Amy Edmondson
Novartis Professor of Leadership and Management at Harvard Business School
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