Temporary furloughs of at least 2,800 employees have begun at Henry Ford Health System, a six-hospital integrated system based in Detroit that has been hit hard by the COVID-19 pandemic.
Top executives at Henry Ford also have agreed to contribute 10% to 25% of their salaries to two employee relief funds, said officials in a statement Wednesday evening. Some other Michigan health system top executives also have cut their paychecks as gestures to deal with the coronavirus crisis, Crain's Detroit Business has reported.
One is the COVID-19 Emergency Needs Fund, established during the current crisis, and the Bob and Sandy Riney Helping Hands Fund, established in 2012 by Bob Riney, Henry Ford's president of health care operations and COO, and his wife Sandy to support employees experiencing unexpected hardship.
"I know that news concerning furloughs is painful — especially for an organization like ours, whose greatest strength has always been our people," Wright Lassiter III, Henry Ford's President and CEO, said in a statement. "We value each team member's unique contribution and this decision does not change that. But, we must face these realities head on."
Other health systems also have laid off or furloughed employees and managers, including Detroit Medical Center, Beaumont Health, McLaren Health Care Corp. and Trinity Health Michigan.
Lassiter said Henry Ford's layoffs are taking place this week and were announced today to employees.
As a result of restrictions on elective surgeries and procedures and treating thousands of patients with COVID-19 or related symptoms, Henry Ford lost $43 million in operating income during the month of March, the health system said.
Henry Ford also incurred millions of dollars in unbudgeted personal protective equipment and testing supplies to care for COVID-19 patients. Losses for April and May are expected to surpass the loss of March 2020.
"For more than 100 years we've been a trusted partner in our region and we have an obligation to position ourselves to continue serving our communities long after this crisis is over," Lassiter said. "We will do this with a balanced approach by reducing expenses, pacing planned capital projects and identifying resources in our day-to-day operations. We'll continue to aggressively pursue funding through federal and other assistance programs as well."
Of the 2,800 employees temporarily furloughed employees who are not directly involved in patient care, most work in areas that have been drastically reduced or where operations have been temporarily closed, Henry Ford said.
Employees will keep their health care coverage and are eligible for unemployment benefits. But during the first quarter of 2020 ended March 31, Henry Ford's net loss was $234.5 million, a decrease of $354.9 million over the same period in 2019.
In late March, Gov. Gretchen Whitmer issued an executive order that restricted non-essential and other elective procedures, surgeries and appointments to preserve personal protective equipment, limit the spread of coronavirus and save critical health care workers for emergency work.
Henry Ford said that combined with the temporary closing of several outpatient medical centers has resulted in nearly a 50 percent reduction in patient services revenue for the most recent past week in April, as compared to the prior year.
Net operating loss for the first three months of 2020 was $36.2 million, a $75.6 million decrease from 2019's operating income of $39.4 million. Non-operating losses for the first quarter were $198.3 million, compared to non-operating income of $81.0 million in the same period last year.
"Health systems that are caring for a large majority of our region's COVID-19 patients are clearly carrying a heavier burden," Henry Ford CFO Robin Damschroder said in a statement. "When it comes to federal assistance, we welcome an equitable, metrics-based allocation model that will help organizations like ours continue our mission."
This article orginally appeared in Crain's Detroit Business.