Unions Accuse UPMC of Wielding Market Energy Towards Employees
A coalition of labor groups on Thursday filed an antitrust complaint with the Justice Department against UPMC, the giant Pittsburgh-based hospital employer, accusing the system of using its enormous clout to depress wages and harm workers.
In its complaint, the group, which includes S.E.I.U. Healthcare Pennsylvania, claims UPMC workers are subject to a “wage penalty” because of the health system’s dominance in local markets. The complaint describes nurses who are given heavier workloads than nurses at other hospitals, creating concerns over patient safety, and catalogs what the coalition considers to be labor law violations that it says illustrate the powerlessness of employees to improve working conditions.
“We have watched UPMC grow and amass power,” said Matthew Yarnell, the president of the S.E.I.U. group there, which has long sought to organize workers at the health system, which is largely not unionized. After a series of acquisitions, it is Pennsylvania’s largest private employer with more than 40 hospitals, 800 doctors’ offices and clinics, and a health plan. With operating revenue of $26 billion last year, it employs about 95,000 people.
While antitrust cases frequently address how powerful organizations can operate as monopolies and unfairly raise prices, a company can also be accused of operating as a monopsony in which it exerts unfair leverage over suppliers, including employees.
Health care and legal experts say this is a novel legal approach to consider the effects on workers of widespread consolidation in the health industry.
In the complaint, the unions claim that UPMC’s monopsony power has also prevented workers “from exiting or improving these working conditions through a draconian system of mobility restrictions and widespread labor law violations that lock in sub-competitive pay and working conditions.”
Reached for comment, a spokesman for UPMC did not directly address the unions’ claim that it violated antitrust law, but defended its treatment of employees. The system “is among the best places to work in all the regions we served,” Paul Wood, UPMC’s chief communications officer, said in an email. He said the system’s average wage was more than $78,000 annually.
“There are no other employers of size and scope in the regions UPMC serves that provide good paying jobs at every level and an average wage of this magnitude,” he added.
He also said that the health system assigned nurses based on patient need and that there was no policy that would prohibit an employee who left one facility from being rehired at another one.
But federal regulators have signaled an increased willingness to look at the effects of an employer’s market power on workers, and concern about how consolidation affects labor markets “is gaining a lot of momentum and attention,” said Jaime King, a law professor at the University of Auckland and an antitrust expert.
“The problem is much bigger than a single merger in a single market,” said Marka Peterson, legal director for Strategic Organizing Center, a labor coalition formerly known as the Change to Win Federation, which is also filing the claim.
The Justice Department could decide whether to undertake its own investigation and whether any charges would be warranted.
The Biden administration highlighted its concerns about the impact of concentration on labor markets in a 2021 executive order, and the Federal Trade Commission recently issued a proposed rule that would ban the use of noncompete agreements.
Increasing consolidation in the health care industry has also focused some attention on fallout among the work force. Some research into hospital mergers has shown a reduction in nurses’ wages. “Health care stands out as being concentrated on both sides,” said Kate Bahn, an economist and research director at the Urban Institute.
And health care workers, many of whom suffered severe burnout during the pandemic, are in short supply across the industry. The high workloads led to numerous strikes by nurses, including recent walkouts at New York City hospitals.
UPMC has often been criticized for what some describe as anticompetitive conduct, and a report released earlier this year echoed some of the issues raised in the complaint.
But whether the Justice Department will pursue action against the health system remains to be seen. While federal regulators may appear sympathetic to the theory underlying the unions’ complaint, these cases are challenging. “Monopsony cases are not new, but they are very hard to prove,” said Matthew L. Cantor, an antitrust lawyer and partner at Constantine Cannon.
This would be the first case to rely primarily on the argument that a powerful health care employer is using its clout in ways that harm workers, and prosecutors must decide whether they have strong enough evidence to take action. “They’re not going to want to fight a case they don’t think they can win,” said Elena Prager, an economist at the Simon Business School at the University of Rochester who has served as a visiting scholar with the Justice Department.