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In Novel Tactic, Labor Unions Target Coos Bay Hospital Board For Recall

Two union-represented groups of workers push to oust publicly-elected board members accused of mismanaging the nonprofit hospital.
Bay Area Hospital in Coos Bay. | COURTESY OF BAY AREA HOSPITAL
October 25, 2022

Two Oregon labor unions, unhappy at how the Bay Area Hospital in Coos Bay is run, are taking the unusual step of trying to eject members of the nonprofit hospital’s publicly elected board through a recall.

Last week, the $85,000 union-funded campaign submitted to the Coos County Clerk’s Office voter signatures to put the recall of two members on the ballot. Union representatives said roughly 2,400 signature sheets for recalling the other four members were stolen recently from the campaign’s office, so those recalls are on hold.

Across Oregon hospital systems, workers use unionization, picketing, strike votes, labor stoppages and formal complaints to pursue better pay and working conditions. But board recalls are virtually unheard of — likely because so few hospitals have publicly-elected boards.

The vast majority of Oregon hospitals have governing boards that are appointed by the hospitals themselves and operate in secret. By contrast, the nonprofit, 172-bed Bay Area Hospital is overseen by a board elected by voters in the Bay Area Health District, which covers Coos Bay and surrounding communities.

Between them, the two unions — United Food and Commercial Workers Local 555 and the Oregon Nurses Association — represent 800 of the hospital’s 1,200 workers.

“The people of Coos Bay deserve better than these (board members). They have mismanaged the hospital,” said Miles Eshaia, spokesperson for the food workers union. Eshaia said he expects a special recall election to be held later this year or early next. He said the recall is unrelated to contract negotiations.

This is the first time the nurses union has resorted to a health district board recall, said nurses union spokesperson Kevin Mealy.

“Unfortunately, most hospital boards are not held publicly accountable. The rise of corporate medicine has left few community hospitals (that) are representative of and responsive to their communities,” Mealy told The Lund Report.

“Prior to the signature theft, more than enough local community members signed recall petitions to dismiss all six hospital directors,” he said. 

However, a representative of the hospital’s management said it is providing quality care and doing its best to cope with staffing shortages and financial constraints imposed by the pandemic.

“We do not feel the board of directors’ work to support Bay Area Hospital warrants any sort of recall effort at all. Bay Area Hospital is very disappointed that a campaign to recall its board of directors is being pursued by unions (and) that one — the UFCW Local 555 — is still engaged in ongoing contract bargaining negotiations. Unfortunately, these unions are using their limited resources and funds by attempting an expensive political recall effort that is damaging to our hospital and community during ongoing contract bargaining negotiations,” according to a statement the hospital issued to The Lund Report.

Recall Funded

The two unions launched the recall drive in July, forming a political action committee called Save Bay Area Hospital. In the summer and fall, the food union contributed $55,000 to the PAC, and the nurses union provided $30,000, according to filings with the Oregon Secretary of State. Then the campaign got rolling, gathering signatures in the district. It has spent all but about $2,000 of its funds.

Before the recall push there had been years of friction and legal sparring between hospital executives and the union-represented workers.

Union representatives say they were triggered into pursuing a recall by the hospital’s ineptitude in hiring a senior executive who turned out to be a convicted embezzler, and because of the board’s decision this spring – subsequently reversed – to save money by shutting the hospital’s 13-bed acute psychiatric unit and laying off its staff.

At the same time, though, both unions have been enmeshed in lengthy contract renewal negotiations with the hospital. Neither had settled on a new contract at the time the recall was launched. And they have been waging legal fights at the Oregon Employment Relations Board, the agency that handles labor contract disputes of public employees.

The health district was formed in 1952 and built the hospital in 1974 using a property tax levy to pay off the debt by 1986. Since then, it hasn’t levied taxes. However, its board is still elected by the public. The latest election was in May, for four seats.

Only a handful of Oregon hospitals are run by such health boards. Most are tiny and rural, such as Blue Mountain Hospital in John Day or Pioneer Memorial Hospital in Heppner. Oregon law lets voters recall local elected officials. That happens sometimes with city councils or boards of education, but it’s extremely rare in health districts.

Wrangling Over Contracts

Labor tensions have long simmered at Bay Area Hospital.

The three-year contract for the nurses — which covers about 250 workers — expired at the end of 2021, and increasingly rancorous negotiations for a new one ran through much of this year before the sides reached a deal in August. Meanwhile, the contract for the food workers — which covers 550 workers — expired in June, and the sides are still negotiating.

Yet the recall campaign has focused on two other issues.

In May, the hospital hired a new chief operating officer, Larry Butler, only to fire him 

about two weeks later when the hospital discovered he had been convicted in 2015 in federal court in Louisiana of embezzlement from two health care employers in 2013 and 2014. The hospital said it had conducted background checks, criminal checks and reference interviews on Butler, but he had managed to conceal his criminal past. Workers asserted that simple research on Google would have found him out. Butler’s trial, conviction and sentencing were extensively covered by Louisiana media in 2015.

Also in May, the hospital announced it had to save money and would terminate 56 temporary workers and close its psychiatric facility. The facility is a money-loser and the losses are “unsustainable,” the hospital said at the time.

After objections from the community, the hospital reversed course and said it would keep the 13 beds open with help from a funder — Advanced Health, the Coos County area Medicaid insurer.

The hospital had to be pushed to seek that help, Eshaia said. “The clinic is open again only due to public outcry,” he said.

However, the hospital management has said the psychiatric unit is a financial burden. Only 12 of the state’s 60 hospitals have inpatient psychiatric units, the hospital said in a posting on its website: “Addressing the complex issues in providing behavioral health care is not a stand-alone responsibility — it requires a team of organizations and community leaders working together to create solutions,” the hospital said.

Labor Disputes

Just as heated have been the disputes at the Employment Relations Board.

In 2021, the hospital filed a complaint alleging the food workers union’s membership procedures and dues-deduction payroll system violated state labor law.

Meanwhile, the food workers union in 2021 filed a complaint saying the hospital violated labor law and the union contract by canceling a new bonus system and using the savings to cover increased payments totaling $180,000 that the hospital had to make into the workers’ defined-benefit pension plan.

The agency has issued proposed orders favoring the union in those two matters, but they are not yet final.

In addition, the nurses union filed a complaint with the labor board in May of this year, saying the hospital violated labor law by unilaterally giving workers a pay raise in the midst of the negotiations for a new contract. The union said that violated labor law. The board agreed and the hospital in June signed an order conceding it had broken the law and promising to pay the union $12,000 to cover its legal expenses in filing the complaint.

Thin Profits, Then Losses

The wrangling has taken place as the hospital’s normally stable finances were upset by the pandemic. Historically, the hospital has had modest annual operating profitability, financial filings with the Oregon Health Authority show. In calendar 2019, for example, it had an operating profit of 1.8%, and a bit more in previous years.

But for the fiscal year that ended June 30, 2021, the hospital reported an operating loss of $10 million on operating revenues of $209 million, mostly driven by higher personnel costs, the hospital’s audited report shows. However, adding in government bailout aid totaling $10 million, the year came out break-even, the audited report shows.

For the first quarter of 2022, unaudited filings with the Oregon Health Authority show an operating loss of about $5 million on operating revenues of about $60 million.

Working On The Recall

Meanwhile, the recall effort moves forward. The county clerk’s office did not return a call from The Lund Report seeking information about the recall process. Typically an election clerk must verify signatures to determine if a sufficient number have been presented to warrant a recall election.

Eshaia said workers hope the recalls succeed, after which they would put forward new candidates to be voted on by the public.

The campaign filed a theft report with law enforcement in hopes of retrieving the stolen signature sheets, Eshaia said. The sheets were the only items taken, he said.

For now, recall petitions have been filed only against the board chairperson, Dr. Thomas McAndrew, and the board secretary, Dr. Donna Rabin. The Lund Report was unable to reach them for comment.

This past summer, McAndrew vowed the hospital would improve its communication with the public.

“Perhaps, we have not done a good job in telling our story in the past, but we are now determined to report to our employees and our constituents on a regular basis,” he said in an August post on the hospital website.

You can reach Christian Wihtol at [email protected].