Labor strife at Kaiser could alter the industry landscape in the short-term

U.S. workers are in a battling mood these days, with approximately 75,000 union healthcare employees at Kaiser Permanente going on strike on Wednesday.

It's a move that union members and labor leaders are calling the largest strike in the healthcare industry. The strike also comes only three weeks after United Auto Union workers went on strike against the "Big Three" U.S. automakers – Ford, General Motors, and Stellantis. That strike has yet to be resolved.

Related: White House Reaches Tentative Labor Agreement to Halt Damaging Rail Strike

Last month, the Coalition of Kaiser Permanente Unions, which represents about 75% of Kaiser's union workers, issued the call for a three-day strike starting on Oct. 4 if company management hadn't agreed to a new labor contract calling for better pay and improved working conditions.

While both parties have engaged in discussions and said they've made progress, not enough ground was given on either side to avoid the three-day strike.

"There have been good discussions with Kaiser on a number of issues, and while there is no concrete agreement, we can see a path to resolution on raising shift differentials," the Coalition stated on September 30. "(We're seeking) a fair remote work agreement, and investments in training for both current employees to promote to harder to fill jobs and community members to become the healthcare workforce needed for the future."

"On important issues, though, we remain far apart," the Coalition noted.

Kaiser workers are seeking "across the board" annual raises of up to 6.5% while Kaiser management is holding fast at an annual salary hike cap of up to 4%, or 10%-to-14% over a four-year period depending on worker location.

Workers are also calling for a "right to organize" in any Kaiser company, including acquisitions along with "improvements" to the company's retiree health care plans, among other conditions. Labor union leaders say Kaiser's union workers reserve the right to strike again in November if no contract resolution is completed.

In a recent statement, Kaiser management says it's bargaining in good faith but infers downscale economic conditions make it difficult to meet worker demands right now.

"In fact, health care costs are increasing because of increased needs and delayed care in the wake of the pandemic, major increases in costs for drugs and supplies, and increased labor costs because of worker shortages and wage increases," Kaiser said in a recent statement. "Wages make up more than half of the cost of health care in the U.S. (and) Kaiser Permanente is not immune to these inflationary pressures."

More Companies in Trouble:

Bud Light is set to lose a big chunk of its business permanentlyBattle for Pride: What to know about the Target backlashWhile the right celebrates over Bud Light, Target, they're cheering the wrong victory

Patient Impact Unclear

What the short-term strike means for Kaiser's 12.7 million patients isn't clear yet and likely won't be until the smoke clears.

The 75,000 striking workers only represents 40% of Kaiser workers. That means 60% of Kaiser staff, including its massive network of doctors, nurses, clinicians, and administrators, will remain on the job for the duration of the strike, which is expected to end Saturday morning.

Plus, not all Kaiser workers are striking, as healthcare services in Georgia, Hawaii, and most of Washington state will be unaffected. States that could see the most service interruptions include California, Colorado, and Oregon, where the number of company union workers is decidedly larger.

"We have detailed continuity plans in place in all of these markets that include the use of non-represented and management staff along with contingency workers. In addition, all our physicians will be available," a Kaiser spokesperson said in an October 4 early morning statement.

"Our members and patients who need urgent or timely medical care should continue to seek it at our hospitals and medical facilities," the statement added. "A strike should not dissuade anyone from seeking necessary care."

Kaiser also stated that it's working with non-Kaiser Permanente hospitals and healthcare clinics to take on patient care if needed this week.

A privately run company that was founded in 1945, Kaiser Permanente is headquartered in Oakland, Cal. The company is the third-largest healthcare insurance provider in the U.S.

Get exclusive access to portfolio managers and their proven investing strategies with Real Money Pro. Get started now.