Public unions continue to cause massive damage to local governments and businesses. Their latest victims: six charity hospitals in California. The powerful unions, led by the SEIU, have put such massive financial burdens on the hospitals for pensions and benefits, that the hospitals now face bankruptcy. The hospitals had found a buyer, Canadian based Prime healthcare, but now the State’s pro-union Attorney General has set union-friendly conditions that were financially unsustainable. Now the deal is dead with Prime Healthcare as they choose to continue to exist as a company rather than sacrifice themselves into bankruptcy as well. The real victims of the Union power and money grab will be the poor who rely on these Catholic charity hospitals for health care. Does the SEIU really stand up for the poor as they claim?
According to the Wall Street Journal, the labor costs of the six hospitals is at 74% of revenues compared to 58% normally seen at non-profit hospitals, the national average. Labor costs are high due to union imposed requirements of high wage scales, inflexible work rules and overly generous pension benefits. The hospitals are now losing $10 million per month with $146 million in total losses since 2010.
Prime Healthcare had actually made a very reasonable offer for the purchase of the hospitals. According to the L.A. Times, “Prime had agreed to keep the hospitals open at least five years, maintain or increase charity care and fully fund pensions of 17,000 current and former workers.” However the Pro-union California Attorney General, Kamal Harris, issued a set of requirements for the sale including keeping the hospitals open for ten years and maintaining several unprofitable service lines regardless of cost to Prime healthcare. Certainly the freezing in place of current economic conditions would serve the Union and protect their jobs at all cost. However, the unions’ gain would mean sapping profits and funds from Prime Healthcare which itself could face bankruptcy of those hospitals or its main company.
But to union leaders, companies just “exist” and their profits are unnecessary and unearned – and all money just magically appears. They believe in the Marxist “Labor theory of value” that states all value in a company comes from the labor of the workers – not from the product or service provided to consumers. If this theory were true, then simply applying a great deal of labor to build a solar-power submarine would make it a highly profitable venture – even if it sunk to the bottom of the ocean! The unions believe they have the right to sap the funds from the corporations – much like a parasite would – in the deluded hope the host will never die. Prime Healthcare was not that stupid and said “no thanks”.
The Daughters of Charity Hospitals actually sued the SEIU for interfering in the sale to Prime Healthcare. The suit alleges that SEIU worked to “hold hostage a proposed sale of Daughters of Charity Health System for illegal and extortive purposes.” The union favored a purchase offer by New York Equity Firm “Blue Wolf”, also named in the suit. It will be interesting to see if Blue Wolf, still interested in purchasing the hospitals, is given a better set of conditions by the Attorney General after Prime Healthcare fled the scene. Of course, they can just get a taxpayer-funded bailout from the government when they start going bankrupt: a favorite tactic of big corporations and financial entities in unholy alliances with governments and politicians. (One Hospital required a $1.7 billion bailout in the recent past, in fact).
This is the latest chapter in the destruction of American by greedy union leaders. The SEIU members in these hospitals were actually rejecting the SEIU attempts to alter the sale: favoring keeping their job over enriching and empowering the Union leaders and their political network. The destruction of American companies and municipal governments has been well described here at the Sunbeam Times in the past (Twinkies, Cities, and St. Petersburg, here and here and here ). In fact, the Unions in St. Petersburg are also threatening the government of St. Petersburg citizens with unsustainable benefits on the backs of average St. Petersburg citizens. Hopefully citizens will wake up and demand the unions stop hurting America and bankrupting their local governments, hospitals and corporations. But it will take courage and a willingness to ignore the Union propaganda to do so – and a willingness to stand by the rare politician who stands up to the Union (see Scott Walker, Wisconsin).