Detroit’s Henry Ford joins coronavirus red ink, furloughs 2,800 workers

Henry Ford officials said the health system had a $43 million loss in operating income in March after the COVID-19 emergency forced it to cancel money-making, non-emergency services and procedures.

Henry Ford Health System Wednesday became the latest Michigan hospital system to announce deep staff cuts as a way to balance its budget against what it called the “devastating impact” from the COVID-19 pandemic.

About 2,800 employees are being temporarily furloughed across the Detroit-based, six-hospital system. The employees are from areas that have closed or where services have dwindled and are not involved in direct patient care, according to a Wednesday evening news announcement.

 

The system reported a $43 million loss in operating income in March after it, like other area health systems, postponed or canceled non-emergency services and procedures. Henry Ford said it had a 50 percent reduction in patient services revenue over this past week compared to the same week last year. 

April and May losses are expected to be even higher, according to the statement.

HFHS, operating in Michigan’s counties hardest hit by COVID-19, said it also faces increased costs for resources, including personal protective equipment. One example: Earlier this month, Henry Ford Chief Operating Officer Bob Riney said the cost of gowns purchased from foreign markets went up 20 percent a day for three straight days. 

Some employees received furlough announcements Wednesday.  Employees will keep their health care coverage and are eligible for unemployment benefits.

The health system, which has about 32,000 employees, has repeatedly declined to offer specifics on its plans in recent days, as other systems announced layoffs. Henry Ford officials did not say how long the furloughs would last and did not immediately respond to a request for comment

Its furloughs came a day after Beaumont Health announced layoffs of 2,475 employees and the elimination of 450 jobs.

Stories from the front  

Bridge Magazine, Detroit Free Press and Michigan Radio are teaming up to report on Michigan hospitals during the coronavirus pandemic. We will be sharing accounts of the challenges doctors, nurses and other hospital personnel face as they work to treat patients and save lives. If you work in a Michigan hospital, we would love to hear from you. You can contact reporters Robin Erb rerb@bridgemi.com at Bridge, Kristen Jordan Shamus kshamus@freepress.com at the Free Press and Kate Wells katwells@umich.edu at Michigan Radio.

Like other health systems that have borne the brunt of coronavirus cases in southeast Michigan, Henry Ford has struggled with the combination of rising COVID-19 costs and the loss of revenue-generating procedures such as elective surgeries and outpatient visits. Riney said earlier this month that 40 percent of the system’s revenue comes from “the ambulatory side” and that loss of typical revenue streams during the COVID-19 pandemic were a “significant pressure point.”

Last week, Henry Ford announced it had resumed outpatient surgeries in specially designated rooms at its hospitals. But by then, the financial damage was already widespread. 

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In a systemwide email Wednesday, 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,” according to the news announcement. 

“I know that news concerning furloughs is painful – especially for an organization like ours, whose greatest strength has always been our people,” the announcement quoted Lassiter. “We value each team member’s unique contribution and this decision does not change that. But, we must face these realities head on.”

The health system’s executive team and senior leaders will contribute 10 to 25 percent of their salaries to two funds to help employees, the COVID-19 Emergency Needs Fund, which was established during the current crisis, and the Bob and Sandy Riney Helping Hands Fund, established in 2012 to support employees experiencing unexpected hardship, the announcement said.

Henry Ford’s Chief Financial Officer Robin Damschroder noted the uneven balance in caring for COVID-19 patients, echoing the words of Beaumont CEO John Fox Tuesday as he announced job losses. Fox, who will take a 70 percent pay cut, went so far as to say some other, unnamed, hospitals had declined to take patients when Beaumont’s patient load overflowed.

“Health systems that are caring for a large majority of our region’s COVID-19 patients are clearly carrying a heavier burden,” Henry Ford’s Damschroder said in the statement. 

Hospitals will recoup some of the lost money through the  Coronavirus Aid, Relief and Economic Security Act, or CARES Act. In Michigan, they will split about $468 million, according to the Michigan Health & Hospital Association. 

But the allocations have drawn criticism because they are based on providers’ past Medicare reimbursements rather than the extent they were impacted by COVID-19 care.

“When it comes to federal assistance, we welcome an equitable, metrics-based allocation model that will help organizations like ours continue our mission,” Damschroder said.

Other systems, too, have reported deep staff cuts and salary reductions for top staff.

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