DETROIT – Beaumont Health announced Tuesday morning that due to the “financial consequences of the COVID-19 pandemic” it is temporarily laying off 2,475 employees, permanently eliminating 450 positions and cutting executive pay.
Beaumont Health CEO John Fox will take a 70% temporary pay cut to his base salary. The other members of Beaumont’s executive leadership will take temporary pay cuts up to 45% of their total compensation, according to Beaumont.
Beaumont said of the 2,475 temporary layoffs, most involve hospital administrative staff and others who are not directly caring for patients with or without COVID-19. Most of the 450 position eliminations are part of the corporate staff or are serving in other administrative roles.
“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,” reads a statement from Fox. “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.”
During a virtual news conference Tuesday morning, Fox shared this data:
Net income drops drastically in Q1, Beaumont reports
The health system reports that in the first quarter, which ended March 31, its 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.
These figures are from Beaumont. Fox said it will be worse in April.
“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,” reads Fox’s statement. “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.”
Beaumont says 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 our 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," reads a statement from Beaumont.
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.
Impacted employees will be eligible to apply for other open positions at Beaumont and given priority, the health system says.
Overall, Beaumont has 38,000 employees.
Last week, the health system closed its Wayne hospital. According to officials, the remaining coronavirus (COVID-19) patients were discharged or transferred to other hospitals last week Tuesday.
The hospital will remain a COVID-19-only hospital in the event that cases surge when social distancing measures are scaled back, officials said. Fox said Tuesday the Wayne hospital is being sanitized.
Last month, the emergency room at the Wayne hospital closed, and the location began accepting only COVID-19 patients.
“The hospital is now temporarily paused and not serving any patients,” reads last week’s statement from Beaumont. “Most staff is being redeployed to other Beaumont sites where they can provide care for more patients. Others will be temporarily laid off and could potentially participate in enhanced state/federal unemployment programs.”