Paul Weaver/Sipa USA via AP Images
UPMC Williamsport, an acute care hospital in Williamsport, Pennsylvania, on November 18, 2021
For the first time in decades, a dominant firm is facing a pending antitrust challenge specifically aimed at its unlawful power over labor markets.
Earlier this month, the Service Employees International Union filed an antitrust complaint with the Department of Justice against the sprawling nonprofit hospital network University of Pittsburgh Medical Center (UPMC). The complaint argues that UPMC’s dominant position in the state allows the firm to constrain labor markets and engage in a broad range of harmful practices against employees. In other words, it’s a monopsony case, one that builds on recent research about the impact of corporate consolidation on workers.
Similar to a monopoly, which refers to a company’s ability as a seller to throttle competitors or consumers, monopsony denotes a firm’s control as a buyer. This power often manifests as a buyer of labor, to affect employment within a given sector.
The complaint takes a novel legal approach by arguing that UPMC wields power over workers not only to suppress wages, but also to restrict job mobility through noncompete agreements and illegally crush collective-bargaining efforts. The complaint unearths previously unreported details about a “do not hire” blacklist used by UPMC, punishing employees who had to temporarily leave their jobs and dissuading many others from ever quitting despite brutal working conditions.
“In this case, we’re raising issues that workers talk about amongst themselves every day: why their wages are low and why they’re overworked and retaliated against if they try to improve their labor conditions,” said Marka Peterson, the legal director at the Strategic Organizing Center, which joined SEIU in its complaint.
The Department of Justice must decide whether to take up the complaint. If they do, it would end a long winter of underenforcement for this key authority in antitrust law. The case could also build momentum for a budding alliance between labor and anti-monopoly groups, which have coalesced around curbing the corrosive effects of economic concentration on labor.
UPMC IS A CLEAR-CUT TARGET for a legal challenge because it exemplifies every essential feature of a monopsony. The health care giant is the largest private-sector employer in Pennsylvania, with ownership of 40 hospitals and 800 outpatient facilities. That makes UPMC the 18th-largest hospital chain in the country. It has also become one of two major insurers in Pennsylvania, along with Highmark; in some parts of the state, it’s the only provider.
The company reached its kingmaker status in the state through an aggressive merger and acquisition strategy, purchasing 28 competing hospitals from 1999 to 2019. UPMC’s rollup entailed ruthless downsizing measures to cut costs, including closing down four hospitals entirely and stripping out services in rural areas, such as maternity wards. As it gobbled up competitors over this period, UPMC laid off over a thousand full-time workers and hundreds of part-time workers. Understaffing then pressured the remaining nurses and physicians with heavy workloads, leading to burnout and fatigue, which the workers say harms the quality of patient care.
These practices have put UPMC in the crosshairs of Pennsylvania lawmakers for years. During his tenure as attorney general, the current governor, Josh Shapiro, reached a settlement to prohibit UPMC hospitals from turning away patients covered by rival health insurer Highmark.
Gene J. Puskar/AP Photo
As candidate for governor, Josh Shapiro, then Pennsylvania attorney general, attends a rally of UPMC and Starbucks workers fighting for their union, September 19, 2022, in Pittsburgh.
The current mayor of Pittsburgh, Ed Gainey, has launched an investigation into nonprofit tax exemption status that would target UPMC, which has long benefited from the exemption despite routinely underperforming on basic metrics for a nonprofit, such as charitable donations.
In the fall of 2022, two state representatives, Reps. Summer Lee (now a member of Congress) and Sara Innamorato (who is all but sure to be elected as the county executive of Allegheny County), held a series of hearings on the hospital workforce crisis. That inescapably meant scrutinizing UPMC, which received the lion’s share of the criticism in the hearing for overburdening staff and restricting mobility with noncompetes.
The hearings led to multiple reports surveying workers at UPMC, ultimately providing the impetus for SEIU to build a monopsony case against the hospital giant.
Reps. Lee and Innamorato co-authored a report with the American Economic Liberties Project, which was cited in the complaint. It details how staffing shortages overburdened workers at UPMC hospitals and undermined patient care. Because UPMC is the largest provider, most workers couldn’t leave their jobs despite these conditions.
The report also notes that the hospital’s merger wave coincided with union-busting efforts. In both 2014 and 2018, the National Labor Relations Board ruled that UPMC broke federal labor law by preventing workers from forming a union. The NLRB has cited the hospital giant for more than 150 labor violations.
“We’re trying to resuscitate this long-neglected area of antitrust law by showing that it has direct impact on worker’s livelihoods,” said Pat Garofalo, the director of state and local policy at the American Economic Liberties Project, who worked on the UPMC investigation.
Another report by EconOne found a direct link between UPMC’s growth and declining wages. The paper, which was commissioned by the SEIU before filing its case, shows that UPMC paid workers 2 percent less than comparable hospital systems. The wage penalty got worse over time with mergers and acquisitions. For every 10 percent increase in UPMC’s market share, worker wages fell at a rate of 30 to 57 cents per hour in relation to other comparable hospitals. EconOne concluded that this was a direct function of the firm’s market power.
“Labor groups are learning what antitrust can do and regulatory agencies are learning about how labor groups view the problem of market power.”
The trove of empirical research combined with hundreds of interviews with workers persuaded SEIU and the Strategic Organizing Center to officially file a joint complaint to the Antitrust Division at the Department of Justice. SOC legal director Peterson told me that the union’s decision was in part inspired by recent hires and actions at the DOJ, signaling a willingness to pursue monopsony cases despite limited case law. Over the past year, the department brought on antitrust lawyer Eric Posner and economist Ioana Marinescu, both of whom have been prominent advocates for making harms against workers a central concern in antitrust cases.
“I couldn’t see us bringing this case even a few years ago but there’s been a sea change at the antitrust regulatory agencies as of late,” said Peterson.
Both Posner and Marinescu have been at the center of a new wave of research in recent years, tying increasing concentration across the economy to stagnant wages and other constraints to worker mobility. A paper by the labor economist Marshall Steinbaum and Marinescu discovered that over 60 percent of labor markets surpassed the levels of concentration that typically would be flagged as antitrust violations by the Department of Justice.
This body of research became a catalyst for forging deeper ties between the labor movement and anti-monopoly organizations, two groups that have found common cause but historically have not always been partners.
“It’s a process of mutual education that’s still under way,” said Brian Callaci, a labor economist at the Open Markets Institute. “Labor groups are learning what antitrust can do and regulatory agencies are learning about how labor groups view the problem of market power.”
The Federal Trade Commission’s recent proposed ban on noncompete agreements was a major step in cementing this new direction for antitrust enforcement. The DOJ’s lawsuit to block Penguin Random House’s merger with Simon & Schuster was another example. The department explicitly argued that the deal would harm authors by giving the new combined publishing house a monopsony over the industry. The courts ruled in the government’s favor, marking the first successful monopsony victory in years.
Blocking a merger, however, rests on different legal authority than breaking up an already existing monopsony, as the SEIU is hoping to do with UPMC.
In the case, the DOJ would have to make a two-pronged argument. It first has to convince the courts that UPMC holds sufficient market share in its region to qualify as a monopsony. Then, it must prove that the hospital giant uses its power to drive down wages and restrict employee mobility, among other issues.
To bolster the second point, the SEIU complaint lays out a sweeping account of how the hospital’s health care workers face lower wages, greater workloads, and fewer collective-bargaining rights under the thumb of the UPMC monopsony.
If the DOJ brought the suit against UPMC, it would be like sending out a bat signal for other unions, and could create a snowball effect for more labor-related antitrust cases. The department might file for monetary penalties as a remedy. But to unwind UPMC’s monopsony, the department could also pursue more ambitious measures, such as forcing UPMC to divest from recent hospital acquisitions, or even demanding that UPMC show union neutrality as part of a settlement.
“It could be significant for the DOJ to prevail in a single-firm monopsony case … and it might put other monopsonists on notice that they also could be exposed to antitrust liability,” said Hal Singer, a managing director at EconOne and co-author of the UPMC report.
