Beaumont Health announced Tuesday it is temporarily laying off 2,475 employees, permanently eliminating 450 positions and slashing executive pay because of the financial toll the COVID-19 pandemic is having on healthcare systems.
CEO John Fox will take a 70 percent pay cut to his base salary and other Beaumont executives will take temporary pay cuts of up to 45 percent of their compensation, the Southfield-based hospital system said in a news release.
Fox said Beaumont's focus on the COVID-19 public health crisis has taken a toll on the rest of its medical care operations. The 38,000-employee, eight-hospital system reported a $278.4 million loss in the first quarter, a $407.5 million decrease in revenue from the first quarter of 2019.
"While many front-line employees have never been busier, other parts of our operations have drastically declined or ceased," Fox said in a statement. "We must make difficult, quick decisions now to protect and readjust to an uncertain future."
Beaumont officials said its first-quarter loses were sustained in the last two weeks of March when the coronavirus outbreak began to push metro Detroit hospitals to capacity and elective surgeries and other procedures were canceled to create capacity for a surge of COVID-19 patients.
The hospital system's financial troubles are expected to continue in the second quarter, Fox said, prompting the need for temporary layoffs.
Beaumont's mass layoffs come a week after it temporarily ceased operations at Beaumont Hospital Wayne after seeing a steep drop-off in hospitalized COVID-19 patients. Doctors at Beaumont Wayne and Wayne County politicians have been pressuring the hospital system to reopen that community hospital.
"The medical staff is really at odds with the executive leadership of Beaumont Health in Southfield. We are exploring ways to open up Wayne," Muzammil Ahmed, M.D., chief of staff at Beaumont Hospital Wayne, told Crain's on Monday. "We have a family medicine program for residents and deliver 100 babies each month. We want them to open it up. We are not pleased with their priorities."
Last week, Beaumont began informing unionized workers at its Wayne, Trenton and Taylor hospitals of pending layoffs and that some employees would be redeployed to its other hospitals in metro Detroit.
Beaumont Health's temporary layoffs and elimination of jobs follows similar moves by some of its competitors in Southeast Michigan.
The Detroit Medical Center has furloughed some 480 employees — 4 percent of its 12,000 employees — and Trinity Health Michigan has furloughed 2,500 employees and temporarily imposed pay cuts for 83 executives ranging from 15 percent to 25 percent.
Of Beaumont's 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. Those employees will receive lump-sum severance packages, Beaumont Health said in a news release.
Beaumont Health employees being laid off are being asked to apply for unemployment insurance, which can be up to $962 per week through July including state and federal assistance.
Laid-off employees can maintain their health insurance plans with normal employee contributions during the layoff period, Beaumont Health said in a news release.
"We will do everything we can to assist our employees affected by these changes," Fox said in a statement. "We never want to have to make decisions like this, but no one could have predicted the extraordinary impact this virus would have on healthcare and society overall."
— Crain's Senior Reporter Jay Greene contributed to this report.
This article was originally published in Crain's Detroit Business.
