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Published: Winter, 2006; Vol 8, Num 1

Getting the Bad Apples Out of the Barrel…
In Modesto

Modesto, in California’s Central Valley, is another city with a Sutter hospital. The United Food and Commercial Workers (UFCW) Local 186-D represents 4,000 retail workers in the area who receive health care through the union’s trust fund. When health care costs increased 40 percent over a two-year period, the fund analyzed quality of care and costs at area hospitals and revised its contractual relationships.

The cost analysis showed that rates at the two Modesto hospitals were 61 to 225 percent higher than other northern California facilities. For the same cardiac procedure, Doctors Medical Center and Memorial Medical Center charged $386,000 and $239,752, respectively, while other regional hospitals, such as the Stanford Medical Center, charged as little as $128,763. Moreover, the two Modesto hospitals had problems with the quality of care in their cardiac programs.

When the UFCW approached both hospitals, Memorial (a Sutter hospital) refused to negotiate on its prices and threatened to increase charges on care already provided fund participants under previously negotiated rates. Negotiations broke off and the fund recommended that Memorial be dropped from the preferred provider network. Meanwhile, negotiations with Doctors developed successfully, producing a 48 percent reduction in costs and the initiation of a quality improvement program.

An education campaign to inform UFCW members about the health care cost crisis and the results of negotiations with the two local hospitals resulted in the membership’s overwhelming support of the Sutter exclusion. The fund’s annual hospital costs were reduced by 50 percent, and it now saves approximately $1,300 per member per year.