Transforming Low-Wage Healthcare: The Promise of Worker Ownership – Non Profit News

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When COVID first reached the US, pre-existing conditions—including profound health disparities, economic injustice, and racism—set the stage for COVID’s particularly devastating effects. It follows that a true recovery from COVID requires transformative approaches that simultaneously promote health, economic, and racial justice.

One area demanding transformative change is the nation’s treatment of its healthcare workforce. While “healthcare” may conjure up images of physicians pulling in six-digit salaries or registered nurses who earn a median wage of $82,750, seven million low-wage workers form the majority of healthcare workers. They include home health aides, community health workers, and nursing assistants. They are disproportionately BIPOC (25 percent African American and 21 percent Latinx) and overwhelmingly (81 percent) female. In addition to paying low wages, their jobs often have high turnover, scant benefits, and minimal training opportunities. According to a recent Brookings Institution report, the median hourly wage for these workers is $13.48, with homecare and personal care workers earning an even lower $11.57 an hour. Molly Kinder of Brookings adds, “the wages are so low that nearly 20 percent of care workers live in poverty and more than 40 percent rely on some form of public assistance.”

US healthcare’s reliance on under-compensated workers not only reinforces racial and gender disparities. More broadly, it undermines health, economic, and racial justice. Low-quality jobs and high turnover lead to lower quality care and worse patient outcomes. Poor working conditions also make it harder to attract enough healthcare workers to meet the growing demand for healthcare services. This leads to a supply-demand mismatch where only those with the most resources can access consistent care. US healthcare’s reliance on low-wage work also perpetuates economic inequity, as the majority of the workforce struggles to meet their material needs. Finally, the current organization of the healthcare workforce perpetuates racial inequity, with white men disproportionately in high-wage positions while Black and Brown women disproportionately occupy the lowest wage tiers.

The chronic undervaluing of essential healthcare workers—and the resulting exacerbation of health, economic, and racial inequities—demands systemic change. Alas, while systemic changes in the workforce are occurring, they are largely moving in the wrong direction.

Two of the largest low-wage healthcare sectors, home health and nursing home care, are increasingly dominated by private businesses, including private equity firms, which reduce care quality while increasing costs in pursuit of profits. Meanwhile, hospitals and clinics are increasingly contracting out healthcare services—replacing stable employment with the healthcare equivalent of gig work. Even the long overdue community health investments made during the pandemic tend to land in the hands of outside professionals rather than community members. Reversing these negative trends requires a different approach.

 

The Worker Ownership Alternative

Worker ownership of healthcare services represents one promising alternative. In a worker-owned cooperative model, the healthcare business is owned and democratically governed by its workers through a one-worker, one-vote model. This model centers frontline workers rather than outside investors and has important benefits in addressing health, economic, and racial inequities.

Ownership by outside investors incentivizes short-term profits, even when that means high employee turnover and deteriorating quality of care. Alternatively, worker ownership incentivizes long-term investment in workers and care quality, resulting in higher wages, better employee benefits, and expanded training opportunities.

One crucial healthcare consequence of these investments is a dramatic reduction in turnover. Home care cooperatives had a 36 percent turnover rate compared to an industry average of 64 percent. Lower turnover is associated with higher quality care.

Worker ownership also promotes economic equity and resilience in ways that benefit patients. When a cooperative is profitable, workers share the profits. When a cooperative faces financial challenges, it does not simply shut its doors like a traditional for-profit firm. Rather, it adapts in ways that prioritize the stability of the workforce and their ability to continue providing care for their patients (such as by reducing hours for workers across the firm rather than laying workers off). Anyone who has depended on a home health aide or other health worker knows how crucial this stability is.

Finally, worker ownership has the potential to reduce racial inequities in the healthcare workforce. Low wages and minimal training opportunities in healthcare sectors disproportionately comprised of Black and Brown workers contribute to racial inequities in the economy. By providing higher wages in currently low-wage roles and training opportunities to access even higher paying jobs, worker cooperatives can help reduce these inequities.

By improving low-wage healthcare jobs, worker ownership can play an important role in addressing health, economic, and racial inequities. However, to be most impactful, worker ownership must be embedded within a broader low-wage healthcare sector strategy.

 

Worker Ownership as a Strategy to Elevate Low Healthcare Wages

While worker-owned firms provide better wages, benefits, and training than their competitors, these advantages are often constrained by low insurance reimbursement rates for the services they provide. Shifting healthcare investment from overpriced drugs and insurance overhead costs to community-based health sectors—as in Medicare for All proposals—is crucial for increasing compensation for low-wage healthcare workers. However, if traditional private firms continue to dominate the low-wage healthcare sector, any increased payments are likely to go largely to owners and outside investors rather than workers.

Unions play a major role in organizing for increased investment in low-wage sectors and ensuring workers share in those benefits. However, the reach of unions has been limited in healthcare. According to the latest figures, only 7.7 percent of private sector health care and social assistance workers are represented by a union, and only 6.6 percent are union members. Union organizing can be particularly challenging in low-wage health sectors like home health where workers are dispersed at different sites, in roles where work is contracted out rather than employment based, and in settings with weak labor laws and hostile employers.

In this context, worker-owned healthcare cooperatives represent a powerful complement to advocacy for equitable healthcare investment and union organizing in transforming the low-wage healthcare workforce. Compared to traditional firms, a higher percentage of revenues in worker-owned healthcare businesses goes to workers in the form of higher wages and better benefits. This ensures any increased investment in low-wage healthcare sectors goes where it can have the greatest impact, to frontline workers instead of administrative costs or investor dividends.

In addition, worker-owned healthcare businesses’ emphasis on improving frontline worker job quality isn’t dependent on the whims of owners. Rather, it’s built into the worker-ownership structure itself. As a result, worker ownership can be developed in contexts that can be otherwise hard to unionize, such as home health and contracted healthcare.

 

Home Health Cooperatives

Home health is the largest and lowest wage sector in healthcare. It is also the sector where worker ownership is most common.

The largest worker-owned cooperative in the US is a home health cooperative in the Bronx. Founded in 1985 with 12 home health aides, Cooperative Home Care Associates (CHCA) currently has more than 2,000 employees, the majority of whom are worker-owners.

The impact of worker ownership is apparent in many facets of CHCA. Facilitated by low overhead costs, the cooperative pays above-average wages. Eighty-three cents of every dollar CHCA makes goes directly to workers. The highest paid employee’s salary is nine times more than the lowest salary. By contrast, the typical corporate CEO in the US makes 351 times more than the average worker at their company.

Equally significant as higher cash wages are the stability and employment benefits that CHCA jobs provide. In an industry dominated by part-time contract work, CHCA guarantees full-time opportunities. And unlike 25 percent of home health aides nationally, all CHCA workers receive health insurance.

SEIU (Service Employees International Union) local 1199 has played an important role in CHCA’s success. In 2004, CHCA adopted a “union co-op” model in which CHCA worker-owners also became SEIU 1199 union members. Union membership has provided access to additional benefits and training opportunities. Crucially, it has also connected CHCA worker-owners to a statewide network of home health aides and advocates to effectively advocate for higher reimbursement rates.

The CHCA model has been replicated in Philadelphia by Home Care Associates, but further replications have been more challenging. As NPQ has reported, cuts in Medicare payment rates for home health services have been a key limiting factor, leading to the closure of a Boston-based home care cooperative. A recent ICA Group report notes that lower payment rates, which require home health agencies to pursue larger scale or diversify services, can create hurdles that cooperative start-ups without outside investment must overcome to flourish.

There are signs, however, that worker ownership in home health may be gaining momentum. The same ICA report cites a small but growing trend of worker ownership, with 14 home care cooperatives—the Bronx’s CHCA and Philadelphia’s Home Care Associates supplemented by a dozen others—identified. With philanthropic support from the Cooperative Development Fund, efforts are currently underway to create a “secondary” or support cooperative that can sustain and coordinate development across home health co-ops nationally.

The rapidly increasing demand for home health services creates an opportunity for these new home health care cooperatives. The job of the home health aide is one of the fastest growing occupations in the economy. The current workforce of 3.5 million health aides is expected to grow to 4.6 million over the next decade. As home health agencies face increasing difficulty finding health aides to meet the growing demand, worker ownership and its related benefits are needed to ensure that there are sufficient healthcare workers to provide the care support demanded by an aging US population.

 

Healthcare Staffing Cooperatives

While worker ownership is most established in the home health sector, other healthcare sectors have recently developed innovative cooperative models. These models present additional opportunities to transform the sector and convert low-wage healthcare positions into good jobs with worker ownership, strong employee benefits, and living wages.

One key worker ownership opportunity has arisen in the healthcare staffing space. Traditionally, private firms have acted as intermediaries between contracted healthcare workers and health systems, taking a sizeable cut of the revenue. This model, which was growing pre-pandemic and exploded during COVID-related staffing shortages, strips workers of employment benefits such as health insurance and paid leave. This loss hits roles like medical assistants and licensed vocational nurses particularly hard, as employment benefits constitute a large portion of their compensation. In contrast to the traditional staffing model, a worker-owned staffing agency treats its healthcare worker-owners as employees, using surpluses to pay higher wages and employment benefits rather than distributing them as dividends to outside investors.

A worker-owned healthcare staffing model was first piloted in 2016 when SEIU-UHW launched NursesCan, a staffing cooperative of licensed vocational nurses (LVNs). NursesCan’s first contract with a community health center once again demonstrated the benefits of worker ownership for both healthcare workers and the health system. Hired to manage a home visit initiative for low-income patients, NursesCan employed 22 LVNs from the local community and provided full benefits. It also reduced the visit cancellation rate from 50 percent to 10 percent and increased the health center’s revenues by 50 percent.

Building on the success of NursesCan, SEIU-UHW launched AlliedUP in California in 2021, which aims to grow to 1,000 workers by year’s end. AlliedUP is a staffing cooperative for “allied health professionals,” a designation that includes a wide variety of healthcare roles ranging from LVNs and radiology technicians to occupational therapists. As worker-owners, AlliedUP members enjoy higher wages, employee benefits, union membership, and training opportunities.

While AlliedUp includes workers across the healthcare industry, its model is especially promising for low-wage healthcare workers. A cooperative staffing model, for example, could be used to staff an entire nursing home. This would bring the benefits of worker ownership to a key low-wage sector where entry is otherwise limited by the high capital costs of buying a nursing home facility.

 

Community Health Cooperatives

Community health is a third low-wage health sector that could benefit from a worker-ownership approach. Ideally hired from the communities they serve, community health staff serve in roles such as health educator (a common position at federally qualified health centers), community health worker, providing a variety of services, including patient outreach and resource navigation, and project manager, coordinating community health interventions. They are generally contracted by health departments, health systems, and other organizations engaged in community health initiatives.

COVID—along with increased emphasis on population health approaches needed to improve health outcomes in low-income neighborhoods—has led to additional investment in this sector. However, many communities continue to lack a hiring platform or training process for local community health practitioners. As a result, effective worker recruitment is challenging. Ironically, in a field that research has demonstrated needs to employ trusted advisors from within the community to be effective, many community health roles are filled by economically privileged outsiders.

In this context, in Southern California, Cooperación Santa Ana has partnered with Radiate, a worker cooperative consulting firm, to create Radiate Consulting Orange County. This community health cooperative aims to better address the health needs of the Latinx community of Santa Ana, a city that is 76 percent Latinx. Organizations contract with Radiate, and worker-owners assemble teams to work on the projects. A small portion of revenues goes to the cooperative to cover administrative costs, and worker-owners keep the rest.

The community health cooperative acts as a platform through which local community health practitioners can market their services and develop their skills. The worker ownership model also allows for the participation of practitioners who may otherwise face barriers to traditional employment or direct contracting. Overall, worker ownership in community health has the potential to increase wages and benefits for low-wage workers and ensure community health resources go to local community members who know best how to support residents.

 

Moving Forward

Worker ownership alone is not a panacea for low-wage healthcare workers, but it can make a critical contribution to converting bad, low-wage jobs into jobs that provide living wages, worker control, and dignity. Without increased investment in low-wage sectors, however, the best that cooperatives like CHCA can do is minimize the harms of inadequate public funding. For this reason, advocacy to increase public funding is critical. Without the political, economic, and training resources of unions and other partner organizations, worker ownership in the sector will struggle to grow. And despite the promising models described above, worker-owned firms still represent only about 4,000 workers out of a national workforce of seven million.

However, alongside political advocacy and unionization efforts, worker ownership can play a key transformative role. It ensures that increased healthcare investment will go to things that matter most for patient care: a more consistent, better trained, and better compensated workforce. It can extend the reach of unions’ efforts by embedding worker control and benefits in the business structure itself, including in contexts where unionization is very challenging.

These benefits, and their impact on health, economic, and racial equity, make worker ownership a crucial part of a comprehensive healthcare workforce strategy.

With the right supports, worker ownership in healthcare has the potential to go from the margins to the mainstream—that is, if winning more equitable healthcare investments is accompanied by a worker ownership strategy to maximize the impact of those investments, if cooperative-oriented financing and technical assistance are made widely available, and if unions continue to use their power and resources to develop and strengthen healthcare cooperatives while growing their own membership.

If all these strategies are combined, then the nation can begin to build a healthcare system that centers worker wellbeing, rather than investor profits. In short, in a country where healthcare employs more workers than any other sector and where healthcare expenditures total $4.3 trillion (18.8 percent of gross domestic product), transforming low-wage healthcare jobs into living-wage jobs is an essential step on the road to addressing the nation’s pre-existing conditions of health, economic, and racial injustice.

 

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