When most people think of labor unions, they imagine a struggle. They picture dimly lit bargaining tables where workers and managers sit face to face, locked in bitter contract debates for hours on end.

But they don't think of harmony and certainly don't picture a smiling manager who jokes good-naturedly with union organizers while signing contracts.

Of course, most people haven't visited Merrillville, Ind., where last month Patient Advocate Home Care apparently became the first unionized home medical equipment provider in the United States.

“It's something that's been in the back of my mind for a number of years,” says Director Dan Buikema, who welcomed the union enthusiastically when his employees approached him with the idea. “I was very pleasantly surprised to see how well it all went.”

The Perks

What may seem a new concept to some has become Buikema's mantra: Unions are not just for workers — they also boost the bottom line by offering significant perks to small companies that are struggling to make ends meet in an environment dominated by large national companies.

“We fight just as hard for union companies as for union employees,” says Larry Regan, the business agent who signed Buikema's 11 employees into Teamsters Local 142, based in Gary, Ind. “Without the companies, there's no union.”

Specifically, the Teamsters Union offers high-quality health plans at rates as much as 15 percent below the national average, and they serve as business advocates for member companies, Regan says.

“We have a big ‘buy union’ drive, where we send out a ‘fair list’ of unionized companies and encourage people to buy from that list,” he explains. “We also publish that list to our union providers [who sell goods and services to the union's 1.4 million members], urging them to support union companies.”

For Buikema, these perks translate into loyal employees and smart business. “The union has become a tremendous asset,” he says. “They're pulling the rope in the same direction as us, and it's been wonderful.”

The Health Plan

During the past few years, health care costs have skyrocketed for small HME providers. Last year alone, Patient Advocate's benefits package costs increased 23 percent, leaving Buikema with an uncomfortable decision:

“The options were to absorb the additional cost, pass it on to our employees in the form of a payroll deduction or offer a watered-down plan that is less expensive,” he says. “Quite honestly, none of those options appealed to me.”

The union presented a way out. The Teamsters Union offers health insurers a large volume of business, which in turn buys the union the power to negotiate on benefits package prices, Buikema explains.

With the Teamsters' help, Buikema was able to provide his staff with “a premium plan — without increasing costs and without passing any of the costs on to the employees,” he says.

The plan also offers pension benefits to employees who stay with the company for at least five years, “and that's huge,” Buikema says.

Ultimately, the success or failure of a business — especially one as service-driven as HME — depends on the employees, he adds. “This health plan is very important to our people, and our people are very important to us. They are what makes us successful.”

The Competition

Since the Balanced Budget Act of 1997 took effect, slashing government reimbursements, tightening controls and forcing many small HME providers out of business, the home medical playing field has changed dramatically. As large providers acquired small providers — building geographical coverage and buying in volume — the ranks of mom-and-pop HME operations thinned considerably.

Today, “the insurance companies gravitate toward the national providers, because it's one-stop shopping,” Buikema explains. Consequently, “an independent with limited coverage is challenged in getting those contracts.”

When selecting providers, “the primary factors [we consider] are quality and volume for our more than eight million membership,” says Matthew Shifkins, a spokesman for Kaiser Foundation Health Plan, based in Oakland, Calif.

And policies such as these tend to favor large, national providers, says Taney Hamill, senior vice president of membership and business programs for the Washington-based Health Insurance Association of America. “I think large, national plans are looking at economy of scale and return on investment,” she says.

In light of the current landscape, Buikema believes that small, independent HME providers must find ways to compete. And the union can help, Buikema says.

“Insurance carriers that were not eager to return my calls or to work with us on becoming a network provider have — during the brief period that we've been unionized — shown more of an interest in working with us,” he says. “We're optimistic that the union will help in securing contracts that previously have been out of reach for us.”

Neil Caesar, an attorney with the Health Law Center and principal of Caesar Cohen Limited, an education and consulting firm for the home care industry, salutes Buikema's innovative thinking.

“It's a great theory — particularly for a smaller guy trying to distinguish himself within the market,” Caesar says. “Looking for the associated benefits of union participation is no worse an idea than many I've seen, and certainly is worth testing.”

However, while the union may help an HME provider located in Indiana, “I don't think there's any benefit for the HME business as a whole,” says Todd Christopher, chairman and chief executive officer of Home Care Supply in Beaumont, Texas, which topped HomeCare's 2000 ranking of private HME providers. “There's not just one answer for everybody out there,” he adds. “Health care is a very local event, and while the union may be a good choice for [Buikema's] business, one size doesn't fit everybody.”

But Buikema hopes his optimism for unions will spread far beyond his region. “There are options out there,” he says. “We don't have to accept the challenges we're presented with in today's HME environment. We can make adjustments that can benefit our employees, our patients and the survival of our companies.”

This motivation to compete is a good thing, says Mario Lacute, president of Andover, Ohio-based Seeley Medical and a board member for the Ohio Association of Medical Equipment Services. But Buikema's premise is flawed, he says. Small businesses are not necessarily at a disadvantage when competing for contracts. It is all a matter of perspective, Lacute explains.

“Leveling the playing field is more a function of the process between one's ears than a function of the marketplace,” he continues. “When you're small, you're able to move quickly in the marketplace.”

And, while big health insurance companies do favor hiring unionized companies to perform services such as printing, Lacute doubts that Buikema's union affiliation will impress insurance companies.

“I don't really think that union affiliation is an issue for insurance companies,” he says, adding, “I understand where [Buikema is] coming from, but I don't see how becoming unionized ultimately is going to help him in his business. I hope he proves me wrong.”

The Challenges

From Buikema's perspective, there is no negative side to unionizing.

After a majority of Patient Advocate's employees presented a signed petition to Regan at Teamsters Local 142, Buikema voluntarily recognized the union, and sat down immediately with Regan to negotiate a 3-year contract.

“This is not typical of what you see with unionization in health care,” Caesar says. In a market where employee earnings data is readily available, employers negotiating contracts with the union are vulnerable to getting squeezed for better employment benefits and wages, he says.

“The dangers are pretty straightforward,” he adds. “I hope [Buikema] is going in with his eyes open.”

But Regan insists that offering fair wages within the home health care market is easy. “People just don't go and price themselves out of a job,” he explains. “We keep in touch with the U.S. Department of Labor's [regional wage statistics], and most companies follow the union wages in order to keep good employees.”

And, union dues are negligible, Regan continues. “You're talking two times the average hourly wage,” he says. “That entitles you to Teamsters pensions, and gives you somebody to negotiate for you. If you had to go out and hire a lawyer, it would cost you a whole lot more.”

The Future

Becoming unionized already is paying off for Patient Advocate Home Care, according to Buikema.

At the urging of the Teamsters Union, Central States Health and Welfare Fund — which is based in Rosemont, Ill., and serves hundreds of thousands of Teamsters members nationwide — is adding Patient Advocate to its network of preferred providers.

And Buikema is on the road, knocking on union halls' doors and asking about members' insurance carriers. “We're calling on brick layers, teachers, electricians and others to find out who their insurance carriers are,” he explains. “The next step is to contact these carriers. Now that we have a union affiliation, we hope they'll take a second look at us.”

Buikema reports that many of the union locals he has visited have pledged support for Patient Advocate, promising to encourage their health insurance carriers to classify Patient Advocate as a preferred provider.

“I don't think that anyone is asking for business to be handed to him on a silver platter,” Buikema says. “However, the playing field needs to be leveled, because independents need to survive to drive the system. We don't want the independent [HME provider] to go the way of the independent pharmacy.”

For the future, Buikema imagines a landscape in which groups of small, independent HME providers compete with large, national HME providers for contracts, improving quality and efficiency in the process.

“We can create an environment where everybody is judged on quality, patient satisfaction and physician satisfaction,” he promises. “And the cream is going to rise to the top.”