Henry Ford Health System will furlough 2,800 employees or 9% of its 31,600 workers across its five hospitals to meet hundreds of millions of dollars in incurred and expected budget losses.
The health system’s senior leaders and executive team will contribute 10% to 15% of their salaries to employee help funds, the Detroit-based health provider said in a Wednesday evening statement.
The hospital system had a $43 million loss in operating income in March due to site closures, increased personal protective equipment costs and the cancellation of elective procedures, according to Henry Ford Health. The losses for April and May are expected to be larger.
“I know that news concerning furloughs is painful — especially for an organization like ours, whose greatest strength has always been our people,” President and CEO Wright Lassiter III wrote in an email to staff Wednesday. “We value each team member’s unique contribution and this decision does not change that. But, we must face these realities head on.”
The furloughs will occur among employees not directly involved in patient care or where workloads have been reduced or eliminated. Employees on furlough will be eligible for unemployment and will maintain health care coverage, according to Henry Ford.
The contributions from leadership’s salaries will go the employee COVID-19 Emergency Needs Fund and the Bob and Sandy Riney Helping Hands Fund, according to a company statement.
The nonprofit hospital system had a nearly 50% decline in patient services revenue last week between procedure cancellations and the closure of outpatient clinics.
Henry Ford’s net loss at the end of March was $234.5 million, $354.9 million less than the same period in 2019.
“Health systems that are caring for a large majority of our region’s COVID-19 patients are clearly carrying a heavier burden,” said Robin Damschroder, the health system’s chief financial officer. “When it comes to federal assistance, we welcome an equitable, metrics-based allocation model that will help organizations like ours continue our mission.”
Beaumont Health CEO John Fox expressed the same hope for federal help when he announced Tuesday that the 38,000-employee system would be laying off 2,475 employees and permanently eliminating about 450 positions.
Fox also announced he would take a 70% pay cut to his salary, which stood at $1.8 million in 2017. Other executives will see their salaries cut up to 45%.
Beaumont Health has taken the largest number of patients who were COVID-19 positive or waiting to be ruled out as COVID-19 positive, with a total of 28,802 COVID-19-related patients between March 13 and April 20, according to state data the health system said it obtained.
“COVID-19 is a permanent resident in America and frankly in the world until a vaccine is in place,” Fox said.
“Only the federal government has the Mastercard with no credit limit on it … that can basically help small business, keep the hospital business from collapsing.”
Trinity Health system furloughed 2,500 employees at its eight Michigan hospitals about three weeks ago, and the eight-hospital Detroit Medical Center announced last week it had furloughed 480 employees.
Ascension Michigan, a Catholic system that owns hospitals across Southeast Michigan including St. John Hospital in Detroit and Providence hospitals in Rochester, Southfield, Novi and Livonia, said it is not planning layoffs.
McLaren Health Care, which owns 14 hospital across the state including in Flint, Oakland County and Macomb County, has said it has furloughed employees but did not say how many.
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