No Money?? Dignity Health's Workers Smell a Rat!

Dignity told workers it had no money

Last week, Dignity Health made an announcement that's got the company's workers describing SEIU-UHW's recently negotiated labor contract as a giant sell-out. Here’s what’s going on:

At the end of June, SEIU-UHW’s Dave Regan and Hal Ruddick negotiated a contract for 14,000 Dignity workers that contains a one-year wage freeze, retirement cuts, an intrusive Wellness Program, and other givebacks.

As the ink was still drying on the tentative agreement, Regan launched a rapid-fire membership ratification vote to quickly seal the concessionary deal… telling workers it was the best they could get because Dignity is having financial difficulties.

Then, on July 2nd -- just three days after SEIU-UHW completed its ratification votes -- Dignity’s CEO Lloyd Dean made a startling press announcement: Dignity is spending hundreds of millions of dollars to buy the nation’s largest independent chain of urgent care and occupational health clinics in the nation, with 172 facilities in 16 states. Here's the beginning of Dignity's press release: 

And here’s how Dignity’s CFO Michael Blaszyk described the significance of the deal in comments to the Sacramento Business Journal:

“With this deal, we’ll be coast to coast, with operations all the way to the eastern seaboard,” said Michael Blaszyk, chief financial officer at Dignity Health. “It puts us in new relationships with some of the biggest employers in the nation, including Wal-Mart and Coca-Cola, and allows us to expand other services there.”

Hardly sounds like a cash-strapped company that's gotta freeze its workers' wages, right? 

So how much did Dignity pay for U.S. HealthWorks? Apparently, more than a half-billion dollars. Blaszyk says Dignity paid “multiple” times more than the company's 2006 sales price. Here's an excerpt from the Sacramento Business Journal:

No terms [of the deal] were disclosed, but when former Foundation Health Corp. CEO Dan Crowley’s venture capital firm and others bought U.S. HealthWorks in 2006 — and Crowley took over as CEO — they paid $185 million.

The company has grown substantially since then. U.S. HealthWorks is expected to general revenue between $375 million and $400 million this year, Blaszyk said.

“Of course we paid a multiple of that, but the multiple was fair,” Blaszyk said.

So did Regan know about Dignity’s corporate shopping spree at the same time that he was inking the deal to freeze workers’ pay and cut their pensions even more?  Tasty bets dollars to donuts that Regan knew.

First of all, the Sacramento Business Journal reports that Dignity began discussing the purchase about three months ago.

Second, Regan has a cozy relationship with Dignity's execs that includes lots of backroom discussions. In fact, during a conference call with corporate bond investors last December, Dignity's executives described how they were having "productive discussions" about the company's "cost structure" and its "right-sizing" plans with "our partners at SEIU." These "productive discussions" took place months before any contract negotiations had begun.

Third, Dignity’s execs referred to the deal during a June 8th webcast that it posted on Dignity’s website. If the company's execs were publicly posting info about the deal in early June, they most certainly discussed it with their purple partners far before then.

Lastly, rank-and-file members on SEIU-UHW's bargaining committee report that Regan was doing the boss's bidding during contract negotiations. At one point, Regan even tried to dissuade workers from pursuing strike plans against the company. As we've seen again and again, "Diamond Dave" is far more interested in pleasing his corporate partners than doing right by the union's members.

So what's next? Tasty hears that "cash-strapped" Dignity has plans for more corporate acquisitions in the near future. Dignity plans to buy Ashland Community Hospital in Oregon next month.