As Michigan fights coronavirus, hospitals gush money and workers lose jobs
Even as the coronavirus pandemic roils Michigan's hospitals — sickening employees, inundating intensive care units and overflowing morgues — health systems are laying off other employees by the hundreds.
The hospitals, and hospital experts, blame declining revenue from lost patient office visits and postponed medical procedures unrelated to the coronavirus pandemic, such as knee or hip replacements, for the layoffs and pay cuts.
On Wednesday, the Detroit Medical Center announced it will furlough 480 employees. McLaren Medical Group said it will cut the hours of many of its 500 doctors, physicians assistants, nurse practitioners and nurse midwives.
A day earlier, Beaumont Health confirmed it would sideline one of its eight hospitals — Beaumont Hospital, Wayne — and hold it empty to serve “as a reserve COVID-19 hospital” that may be used at some undefined point in the future.
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At least 300 workers at Beaumont’s Wayne hospital were laid off, according to the Service Employee International Union's Healthcare Michigan, which represents about 1,000 employees at three of Beaumont’s hospitals, including Wayne.
And on Monday, the president of the union that represents registered nurses at McLaren Macomb said the hospital would lay off 16 to 20 operating and recovery room nurses this week.
While another large Detroit health care provider, the Henry Ford Health System, declined to say whether it was planning layoffs, it released this statement from Brenda Craig, vice president, integrated communications:
"There is no question that this pandemic is having a financial effect on our health system and we are continuing to assess the full impact as this crisis evolves. Like other health systems across our region, we are exploring a number of options to stabilize our financial performance including pursuing federal assistance programs and identifying ways to reduce expenses."
Shooshan Danagoulian, assistant professor in the economics department at Wayne State University, said the coronavirus pandemic is having a very sharp, negative impact on hospitals because they depend so heavily on elective and non-emergency care for revenue — medical work that has ground to a halt during the COVID-19 crisis.
With so many workers now unemployed and lacking the health insurance their jobs provided, patients who do show up at the hospital may be unable to pay their bills, she said.
"In this pandemic, hospitals are going to have to find new ways of reducing their costs. Right now, physician groups and hospitals are cutting physicians' salaries and hours, and administrators are taking pay cuts," she said.
And they're also laying off other workers, such as laboratory assistants and patient intake employees.
"Providers overall are feeling like they're caught between a rock and hard place," she said. On one hand, they're "running toward the fire" that is COVID-19. On the other, they're "having to make these tough financial choices: how to keep their staff, how to pay their staff, and who to let go ... hospitals have no good choices for surviving this."
Detroit Medical Center is especially hard hit, with 480 employees to be furloughed.
In a written statement released Wednesday, CEO Audrey Gregory said the employees of the eight-hospital system “remain on the front lines of the COVID-19 pandemic,” but noted that the state’s stay-at-home orders have forced some operations to be “temporarily closed or ramped down.”
Those restrictions ban elective or non-emergency procedures — the more profitable procedures on which hospitals rely to balance their bottom lines — so hospitals can have enough room and resources to handle COVID-19 patients. The cancellations also keep people without COVID-19 infections from possibly being exposed at hospitals also treating COVID-19 patients.
McLaren Medical Group, part of McLaren Health Care, said it experienced a reduction in patient volumes of more than 60 percent and will cut its employees' hours.
Julie Lepzinski, president and CEO of McLaren Medical Group, said in a statement that it was "taking a critical look at offices most impacted. We are adjusting hours of operation to account for decreased volume, while maintaining access for essential care. For patients in need of more routine care, we have expanded our telehealth availability to help ensure access to care."
She said McLaren Medical is working with physicians to "identify those who may be temporarily furloughed for the next two months. They will maintain a certain level of compensation and continue their healthcare coverage. We don’t yet have final numbers or locations for furloughed physicians, as we are reviewing patient volumes on a regional basis and ensuring we continue to provide necessary care across the state.
"Of the nearly 500 providers we have across Michigan, all will continue working throughout this healthcare crisis. However, many will have reduced working hours based on the needs of our communities and the patients we serve."
According to McLaren Medical's website, it has more than 300 physicians, as well as physician assistants, nurse practitioners and nurse midwives who work at more than 150 primary and specialty centers throughout a 35-county region.
Stories from the front
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Beaumont Health has said it is also struggling financially.
Beaumont, whose CEO was among the first to raise concerns about health care finances amid COVID-19, reported Monday that it was $54 million in the red in net operating income during the first quarter of 2020. CEO John Fox has called for a $300 billion to $600 billion federal Hospital System Super Fund.
It is now putting its hospital in Wayne on stand-by if there is a COVID-19 resurgence.
“The pandemic remains very unpredictable,” spokesman Mark Geary said.
Jason Bradford said he’s now without a job. The Ypsilanti man said he has worked at Beaumont Wayne in the patient-access registration department since December 2014.
In recent weeks, the Wayne location canceled its scheduled procedures and closed its emergency room. In Bradford’s words, “the hospital was literally only COVID-19 patients.”
Then Beaumont stopped admitting new COVID-19 patients to the hospital, which has 185 beds. Staff was cut, too.
Bradford said that within hours of the last patient being taken out of Wayne hospital by helicopter Tuesday night, Beaumont Wayne employees were told by email they were being laid off.
Michigan Democratic U.S. Reps. Debbie Dingell and Rashida Tlaib sent a letter Tuesday to Beaumont CEO Fox about the temporary closure of the Wayne campus, saying they were “alarmed” by the decision to “close a crucial health care facility during the deadliest pandemic our nation has seen in over a century.”
They cited statistics about how vital the hospital is to the area it serves, handling 61,000 emergency room visits in 2018 and delivering 1,000 babies that year.
In the Michigan county hardest hit by the COVID-19 outbreak, they said closing Beaumont Wayne is “not only irresponsible, it is a threat to the very health and safety of the community you claim to serve.”
Beaumont Health’s executive vice president and COO had been scheduled to speak at Dingell’s town hall Wednesday night. But after Dingell sent the letter, the VP canceled her appearance.
SEIU President Andrea Acevedo said 300 people at the Wayne hospital have lost their jobs.
“They laid off every single worker,” she said.
Unionized Beaumont workers are being laid off more than non-unionized staff, she said. Worse, she said, Beaumont workers who are part of labor unions are not eligible for the $500 or $1,000 hazard pay bonuses issued to others on the front lines.
“We really feel that Beaumont as an entity has taken this pandemic and used it as a way to really attack workers and especially workers that are represented by unions,” Acevedo said.
Danagoulian, the Wayne State assistant professor, said she believes hospital volumes will slowly recover through the summer, but will not return to pre-pandemic levels until next year.
Red ink, but perhaps innovation as well
Wally Hopp, a distinguished professor of business and engineering at the University of Michigan who studies the business of health care, said the layoffs are a sign of the stress the health care system is under.
"They're trying to stem the red ink that's hitting them," Hopp said. "The lion's share of their costs is people. It's tragic that they're furloughing people in the middle of a health and economic crisis."
Hopp said as the pandemic continues — it's been only weeks since it hit Michigan — "another shoe keeps dropping. That's a shame."
But the pandemic is also forcing hospitals to "innovate in a rapid way," Hopp said. "It's a shock to the system that forces some innovation."
But he is concerned about already struggling rural hospitals in Michigan and across the country.
"If major health care systems" have to cut costs like this, "imagine what's happening to the smaller, already at-risk hospitals," Hopp said.
Rural hospitals on the brink
Just as COVID-19 is often hardest on the weak, elderly and those with underlying medical conditions, "the same is true on the financial side. Hospitals that are in weakened financial shape are threatened that much more."
There are already signs of rural pain.
Gov. Gretchen Whitmer’s executive order March 20 that shut down non-emergency procedures was the last day that Hillsdale Hospital performed a non-emergency surgery, said JJ Hodshire, its chief operating officer.
Also idled were pre-op efforts and follow-up care after surgery, such as physical therapy or home care. The hospital’s pain clinic has been closed for now, and there are few blood draws, Hodshire said last Friday.
Now facing an estimated $10 million loss by June 30 — a thunderous blow for the small, 105-year-old hospital — Hillsdale has laid off 15 percent of its staff, he said.
Hodshire largely blames Whitmer’s stay home, stay safe orders. The same orders that cancel non-emergency care in the state’s hardest hit regions make little sense in rural areas with fewer confirmed cases, he said.
He’d restart those non-emergency procedures tomorrow if it weren’t for Whitmer's order, he said, noting the hospital was caring for just two patients with COVID-19 that day.
“If she would not have taken the executive order and implemented, that we wouldn't be having this discussion,” Hodshire said.
“We're losing millions on a monthly basis,” said Brian Long, CEO at Owosso-based Memorial Healthcare, who said the hospital began postponing procedures about a week before Whitmer’s order.
More than surgeries, those include routine mammograms, colonoscopies and well-child checks, for example. Patients also are avoiding emergency rooms, leery of what they might encounter in waiting rooms, he said.
Last year, Memorial had an “exceptionally good year,” ending with about $3 million on operational income. Now, he said, “we’re looking at losses of $3.5 to $4 million every month.”
As a result, it has furloughed 200 of its approximate 1,500 employees — medical assistants, cases managers, accounting personnel and others.
“It was one of the most difficult decisions that you can imagine,” Long said. “We have gone through some tough times, but I have never — and I repeat, never — in my career ever had a reduction in force.
He said, “If we do nothing at all, we’d probably be looking at a year and we’d be totally bankrupt."
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