Beaumont Health, which officials say has cared for more COVID-19 patients than any other health system in Michigan, is the latest healthcare provider to resort to layoffs to make up for a drop in revenue.
Beaumont officials announced Tuesday the health system, which has some 38,000 employees, will temporarily lay off 2,475 workers, permanently eliminate 450 positions and cut executive pay. The moves are necessary, company officials said, because nearly all inpatient and outpatient services and other non-COVID-19 medical services were halted once Beaumont began treating COVID-19 patients.
In addition to the personnel cuts, Beaumont Health CEO John Fox is taking a temporary 70% pay cut, and other members of the Beaumont leadership team are taking up to 45% cuts.
Most of the layoffs involve hospital administrative staff and others not directly involved in caring for patients with or without COVID-19.
“I am extremely proud of our team’s rapid response to COVID-19. While many front-line employees have never been busier, other parts of our operations have drastically declined or ceased. We must make difficult, quick decisions now to protect and readjust to an uncertain future,” Fox said. “We also expect economic pressures on Beaumont and the health care industry to continue well after the COVID-19 initial surge subsides, which is why we made the difficult decision to eliminate 450 positions. We must adjust the way we operate our organization moving forward. This pandemic has changed the delivery of health care, and we will be treating patients with this virus until we get a vaccine.”
Temporarily laid-off employees can apply for enhanced unemployment benefits available through state and federal programs. As additional medical services are brought back online at all Beaumont campuses, including Wayne, employees could be asked to return to their roles. These individuals can also continue to participate in their Beaumont health insurance and other benefits at their current employee rates during the layoff period.
Those whose jobs are eliminated will receive a lump-sum severance package and will likely be able to take advantage of enhanced state and federal unemployment benefits. These employees will have the option to continue their benefits at current employee rates through their severance period.
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Impacted employees will be eligible to apply for other open positions at Beaumont and given priority.
“We will do everything we can to assist our employees affected by these changes. We never want to have to make decisions like this, but no one could have predicted the extraordinary impact this virus would have on health care and society overall,” Fox said. In addition, Beaumont will pause or cancel some nonessential projects. Beaumont will also continue to strongly advocate for federal and state assistance to rescue the health care industry and provide meaningful financial relief.
In the first quarter, which ended March 31, Beaumont’s net income was -$278.4 million, a decrease of $407.5 million over the same period in 2019. Operating revenue fell to $1.07 billion, a $78.2 million decrease over the $1.15 billion reported in the first quarter of 2019.
Net operating income for the first three months of 2020 was -$54.1 million, a $91.7 million decrease compared to the same time last year. It should be noted that Beaumont was only impacted by the virus for the last two weeks of March. The system expects the second quarter financials to be challenging as well.
“Through this crisis, we have dramatically changed the way we care for patients. We have seen exponential growth in telehealth, new approaches to staffing and a regional perspective to deploy resources and assets,” Fox said. “We will continue to adapt our health care system to deliver the best, compassionate, extraordinary care every day. Despite an uncertain future, I am confident Beaumont will emerge from this crisis as a strong organization.”