There is an epic battle raging in Pittsburgh.  Not surprisingly, that city’s 900-pound aggressive healthcare gorilla, UPMC, is at center stage.

On the other side, equally not surprisingly, is SEIU, also known as the Service Employees International Union.  They are demanding that the $10.2 billion UPMC become the wage leader for the community, much in the same way that US Steel was back in its heyday, before their high prices made them vulnerable to overseas competition and forcing closure of all but one of their production operations in Pennsylvania.  Pittsburgh, once the capital of steel in the US, now has more steel industry employees working in coats and ties than in the mills.

One bit of irony, UPMC’s 20-feet tall letters are emblazoned across the top of the city’s tallest building, the 64-story US Steel Center Tower, in downtown Pittsburgh, according to a report in The New York Times.  US Steel has survived and still is a major steel producer but its operations are now scattered across the U.S.

SEIU is using some of its standard union organizing techniques, from wailing about the CEO’s $6 million in annual compensation to the System’s lease of a $50 million corporate jet that UPMC officials said is used to transport executives to their “for-profit” hospitals in Italy, Ireland and Kazakhstan, according to the Times.  UPMC officials point out the $400 million in profits from those ventures support the System’s non-profit mission in the US.  SEIU is supporting the City of Pittsburgh, which is challenging UPMC’s $20 million in local tax subsidies.   Then there were the messy staged traffic jams outside the UPMC corporate headquarters and the arrests during a protest in the building’s lobby of some current employees and 11 members of the local clergy who were insisting on meeting with CEO Jeffrey A. Romoff, the Times reported.  This is all about embarrassing UPMC into agreeing to the union’s demands.  Meanwhile, UPMC has retaliated in this PR war declaring that they did not expect much from SEIU and have seen less.

UPMC’s lowest minimum wage currently averages $11 an hour.  The union wants a wage of $15 an hour. 

UPMC argues that would wipe out their one to two percent margin.

Regardless of your views on unions, or not-for-profit hospitals that produce significant profit margins – aka excess of revenue over expenses – this is an important battle, one that has waged for two years in Pittsburgh.  Each side is determined to win.

The union and other local leaders want UPMC to replace US Steel as the local wage leader, to set the standard locally and with other health systems nationally who are the leading employers in their respective communities, the Times reported.

What are your thoughts on this issue?  Do unions need to rethink their value proposition in an era of shrinking reimbursement?  Do large health systems need to be more aware of their community value, other than providers of charity of care?