As 75,000 Kaiser healthcare workers walk off the job, Tenet Healthcare could be next to face a strike

By Eleanor Laise

Hospital stocks are under pressure amid labor strife

With 75,000 Kaiser Permanente healthcare workers striking this week, hospital stocks are under pressure, and industry giant Tenet Healthcare Corp. (THC) could be next to face a significant work stoppage, analysts say.

Healthcare workers at 11 Tenet facilities are poised to go on strike starting Oct. 23, if no deal is reached during the next bargaining session scheduled for Oct. 18 and Oct. 19, according to the SEIU-United Healthcare Workers West, which represents nearly 4,000 Tenet employees and also represents some of the striking Kaiser workers.

The widening labor unrest weighed on some hospital stocks this week. As of mid-afternoon Thursday, Tenet Healthcare shares were down about 9% so far this week, while Community Health Systems Inc. shares (CYH) were down about 4% for the week. HCA Healthcare Inc.'s stock (HCA) was roughly flat.

In negotiations with Tenet, the union is seeking solutions to a healthcare-staffing crisis, a $25 minimum wage, and investment in workforce development, an SEIU-UHW spokesperson told MarketWatch Thursday. Rather than addressing the staffing crisis, the spokesperson said, the company has submitted a proposal for staff to work at multiple hospitals and has not offered changes that would retain current workers or incentivize longevity.

"Our hospitals have been bargaining in good faith to reach a fair agreement to continue to recruit and retain staff," Tenet Healthcare said in a statement to MarketWatch Thursday. "Unfortunately SEIU-UHW is prioritizing spreading false narratives over reaching an agreement for its members."

Tenet said it provided the union "a competitive initial wage offer that would result in some of the biggest increases SEIU-represented employees have ever seen," but the union "is refusing to make meaningful improvement on its wage proposal."

If a strike does occur, Tenet said, "we are prepared and will be in full operation during that time." Tenet employees represented by the union include certified nursing assistants; licensed vocational nurses; emergency room, radiology and respiratory technologists; and other workers, according to SEIU-UHW.

While the potential strike could stir up some additional volatility in Tenet shares, Truist Securities analysts wrote in a note Thursday, the stock looks attractive based on the recent sell-off, the company's sizable exposure to ambulatory surgery centers, and other factors. The analysts reiterated their buy rating on Tenet shares and $92 price target.

The increased prominence of labor issues in healthcare is also "another sign that the challenges of clinician shortages remain real and likely to require continued utilization of contract staff," Benchmark analysts wrote in a note Thursday. The firm has buy ratings on healthcare staffing companies AMN Healthcare Services Inc. (AMN) and Cross Country Healthcare Inc. (CCRN).

Read next: 75,000 Kaiser healthcare workers are set to strike in October, accusing management of bad-faith negotiations

-Eleanor Laise

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10-05-23 1530ET

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