Hospital industry executives are negotiating a deal with a major union for health care workers to stave off a November ballot question that could cost some of the state’s most prominent medical institutions hundreds of millions of dollars a year.
At issue is a proposed ballot initiative by the Service Employees International Union, Local 1199, that would dramatically change the way health care is financed, taking money from hospitals that are paid higher rates and giving the money to lower-paid hospitals, and to consumers through their insurance companies.
Backers say the ballot initiative could eventually lower health care premiums for some consumers and shore up struggling community hospitals. It is largely aimed at Partners HealthCare, the state’s highest-paid health care provider, which would lose $440 million a year if voters were to approve the ballot question, according to the SEIU. The parent company of Massachusetts General and Brigham and Women’s and eight other hospitals, Partners warns that the initiative could force it to cut thousands of jobs.
Partners confirmed Thursday that it has been negotiating with the SEIU local, and representatives for some of the state’s other hospitals said they are involved in the talks, too.
“We’re currently in conversations with many stakeholders, including the SEIU, in the hope that we can avoid a messy ballot fight,” Partners spokesman Rich Copp said. “Partners is opposed to the ballot initiative because it’s simply bad public policy, it’s poorly designed, and it does not help the hospitals that need help the most.”
The SEIU has collected more than the required 64,750 signatures necessary to clear a key hurdle in the state’s ballot process, and has until July 6 to submit another round of about 10,000 signatures it needs to get the question on the statewide ballot. But union leaders have also indicated they would drop the campaign if they can agree with the hospital industry on an alternative to the approach in their ballot initiative.
Tyrék D. Lee Sr., executive vice president of the union local, known as 1199SEIU, said in a statement that the union “stands ready to work with any and all stakeholders on other alternative solutions which address the needs of community and safety-net hospitals.”
Among the ideas being discussed: In exchange for the union’s dropping the ballot question, Partners may funnel money into a fund for struggling community hospitals and allow 1199SEIU to increase its union membership at Partners hospitals.
Of 1199SEIU’s 52,000 members, about 1,200 work in Partners facilities.
If they can’t strike a deal, both sides are likely to find themselves in an expensive political fight leading up to November. The hospital industry has committed to spend at least $14 million on the campaign, of which at least $12 million would come from Partners, according to people with knowledge of the industry’s campaign. The union has indicated it would spend heavily to promote the question.
The Massachusetts Hospital Association opposes the union initiative even though many of its members would benefit if it were to pass. The association says the initiative would impose heavy regulations on health care and is the wrong strategy for setting public policy. It has created a political committee and hired Rasky Baerlein Strategic Communications to fight the ballot question.
“Partners will join with the MHA to defeat this measure if it appears on the ballot, including spending money on a campaign to oppose it, which is a deplorable waste of health care dollars,” said Copp, the Partners spokesman.
Several state reports have said that some hospitals, such as Massachusetts General and Brigham and Women’s, are paid much more for providing essentially the same level of care as others. The union initiative would prohibit providers and private insurers from entering into contracts that would pay hospitals more than 20 percent above the average payment for a medical service. The only other medical center that would be hurt by the initiative is South Shore Hospital in Weymouth, which stands to lose $17 million a year.
But the ballot question would result in a windfall for many Partners competitors. For example, Cambridge Health Alliance would get an additional $23 million for its medical care, while hospitals in the Steward Health Care System would receive $21 million more a year.
Many other hospitals would gain smaller payments. Millions of dollars would also go back to insurance companies, to be passed on to consumers through lower premiums, 1199SEIU says.
Steward, owned by a private equity investment firm, is the only large hospital system to support the ballot question, arguing that struggling community hospitals need help to compete in a difficult health care market. The company runs St. Elizabeth’s Medical Center, Carney Hospital, and seven others.
The price disparities between Massachusetts health care providers were brought to light after a 2008 Boston Globe investigation and subsequent reports from then-attorney general Martha Coakley.
Massachusetts passed a law in 2012 to help contain health care costs, but the Health Policy Commission, a watchdog agency, and Attorney General Maura Healey said in recent reports that price variation remains a persistent problem. The commission cited data showing that average payments for routine maternity care, for example, varied widely, from $18,500 at Mass. General to less than $10,000 at other hospitals.
That has implications for health spending statewide because the most expensive providers also treat the most patients.
John E. McDonough, a professor at the Harvard T. H. Chan School of Public Health, said the SEIU’s ballot question has forced the industry to contend with price disparities.
“The conversation would not be going on at the level of intensity it is if it were not for the ballot initiative,” he said. “The implications are significant for the hospital community, which is why so many folks are paying so much attention to this.”
The union, the health care industry, and legislators have just two months to find a compromise before the SEIU’s question is likely to head to the ballot. Officials on Beacon Hill are encouraging the parties to strike a deal.
“A lot of the stakeholders feel that this issue is better handled deliberatively than through the blunt instrument that is the ballot initiative process,” said state Representative Jeffrey Sánchez, a Jamaica Plain Democrat who cochairs the Joint Committee on Health Care Financing.
“I think it’s important that people come to a consensus. That’s how we do things in Massachusetts with health reform.”
Priyanka Dayal McCluskey can be reached at priyanka.mccluskey
@globe.com. Follow her on Twitter @priyanka_dayal.