Financial Impact of COVID-19 Pandemic Forces Temporary Layoffs at Henry Ford Health System
DETROIT – Due to the devastating impact from the COVID-19 pandemic, Henry Ford Health System has joined other health systems in making the difficult decision to temporarily furlough some of its workforce. The layoffs are taking place this week and were announced today to employees. In a systemwide email, Henry Ford’s President and CEO, Wright Lassiter, III, acknowledged the courage and resiliency of staff during the crisis and the health system’s commitment to transparency.
“I know that news concerning furloughs is painful – especially for an organization like ours, whose greatest strength has always been our people,” wrote Lassiter. “We value each team member’s unique contribution and this decision does not change that. But, we must face these realities head on.”
Those realities include a $43 million loss in operating income during the month of March due to the postponement or cancellation of services and procedures, temporary site closures, and an increased need for resources to care for COVID-19 patients, including personal protective equipment for team members. Losses for April and May 2020 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,” continued Lassiter. “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.”
Approximately 2,800 employees are being temporarily furloughed across the six-hospital system – those not directly involved in patient care, from areas where workloads have been drastically reduced or where operations have been temporarily closed. Employees will keep their healthcare coverage and are eligible for unemployment benefits.
Additionally, the health system’s executive team and senior leaders will also begin contributing between 10% - 25% of their salaries to two funds created to help employees: the COVID-19 Emergency Needs Fund, established during the current crisis, and the Bob and Sandy Riney Helping Hands Fund, established in 2012 by Henry Ford’s President of Healthcare Operations and Chief Operating Officer Bob Riney and his wife Sandy to support employees experiencing unexpected hardship.
As of March 31, 2020, Henry Ford Health System’s net loss was $234.5 million, a decrease of $354.9 million over the same period in 2019. The postponement of non-time sensitive procedures, surgeries and appointments, combined with the temporary closing of several outpatient medical centers has resulted in nearly a 50% 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 a 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,” said Robin Damschroder, Henry Ford Health System Executive Vice President and 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.”
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