While news reports of overwhelmed and exhausted front-line healthcare workers have been getting a lot of attention in the media, other healthcare workers are suffering from pay cuts, furloughs and redeployments as a result of the COVID-19 pandemic. This is yet another area where the pandemic is causing disruptions to the healthcare system, and the effects are likely to felt for a long time come.
As first reported by Medpage Today, Trinity Health in Michigan temporarily furloughed 10% of its workforce in early April. The furloughed employees were mostly non-clinical workers. In addition, Trinity Health is cutting compensation for executive leaders by up to 25%, and eliminating all performance-based incentives. However, Trinity Health noted that the furloughs “are far less than the 50%-60% loss of revenues the health system has withstood since the crisis began – driven by the loss of elective and routine medical care, and the pausing of many administrative functions.”
Meanwhile, Sarasota Memorial Health Care System in Florida implemented temporary furloughs and reduced hours in an effort to immediately reduce costs following a drop in revenue of $16 million in March. Following the cancellation of non-emergency procedures, surgery cases were down by 50%, while emergency departments and urgent care centers experienced 45% and 66% decreases in volume, respectively.
The situation at Trinity Health and Sarasota Memorial are not isolated incidents. Becker’s Hospital Review is keeping a running tally of hospitals furloughing workers in response to COVID-19. As of April 24, 2020, 191 hospitals had announced furloughs.
These cutbacks are affecting non-clinical workers and healthcare providers alike. Some physicians are being subject to steep pay cuts, while others are being redeployed to work in ICUs and ERs tending to COVID-19 patients, or to drive-through testing sites or telehealth centers.
It is not clear how long these furloughs and pay cuts will last. David Verinder, CEO of Sarasota Health, struck an optimistic tone, noting that “[o]nce the pandemic abates … I am hopeful we will bounce back quickly, thanks to the reputation and strength of our team and the support of our community.” However, other groups are less optimistic. The American Hospital Association (“AHA”) issued a fact sheet on the financial challenges facing hospitals and health systems due to the pandemic. The AHA notes that the dire financial projections have caused the three major credit reporting agencies to revise their financial outlooks from stable to negative, likely making it hard for hospitals to borrow money. This change coupled with the drastic decline in revenue, and increased costs due to uncompensated care of COVI-19 patients, estimated to be up to $41.8 billion, puts hospitals at risk of closing.