Even nation's largest health systems laying off health care workers amid COVID pandemic

Even large health systems are cutting back, including layoffs.

April 24, 2020, 4:01 AM

As the novel coronavirus leaves a path of human devastation in its wake, the financial future of some of the nation's largest health care systems is also now in jeopardy -- leading many of these institutions to let go of health care workers at a time when patients need them most.

While private practices and smaller health systems were some of the first to be affected, as time has stretched on, some of the country's largest health systems have shown that they too are vulnerable.

COVID-19 has kept many doctors and nurses busy, but diversion of health care resources towards the care for those with the virus has been an unprecedented financial drain, since then many of the hospitals' usual stream of revenue -- including pricey elective surgeries -- has been shut off. Now, some of the nation's biggest health systems claim they cannot weather this storm without sacrificing employee jobs or cutting their pay.

Tune into ABC at 1 p.m. ET and ABC News Live at 4 p.m. ET every weekday for special coverage of the novel coronavirus with the full ABC News team, including the latest news, context and analysis.

"It is disheartening to see front-line health care workers being laid off and furloughed," said Dr. Jay Bhatt, an internist in Chicago and ABC News Contributor. "I have seen my colleagues and friends who were proud to be health care workers now on the front lines of unemployment who are anxious about how this will impact themselves and their families.”

Speaker of the House Nancy Pelosi adjusts her face mask as she arrives inside the U.S. Capitol in Washington, April 21, 2020.
Tom Brenner/Reuters

A $100 billion chunk of the $2 trillion economic relief package, dubbed the CARES Act, earmarked for hospitals has helped -- but hospital leaders say it's not enough to match the drastic losses.

"The CARES Act funding and some state funding we've received have been very helpful and timely, but it's kind of a drop in the bucket in terms of how much our members are going to really difficult financial position that they're currently," said Ruthanne Sudderth, a spokesperson for the Michigan Health & Hospital Association (MHA), which represents all community hospitals across the state of Michigan.

The House approved another relief bill Thursday that includes an additional $75 billion for hospitals.

An analysis this week by the Hospital and Health Association of Pennsylvania (HAP) highlighted the financial challenge health systems are facing, stating that in March, "hospital operating margins dropped by an estimated $914 million compared to expectations.”

HAP is a non-profit membership services organization that represents over 240 member hospitals. The organization said the financial trouble is “a result of the cancellation and delay of all non-emergent procedures and precipitous declines in patient volume resulting from forgoing care.” ABC News previously reported medical professionals are concerned people with serious non-coronavirus conditions may be staying home rather than going to the hospital for fear of contracting the virus.

The report emphasized that Pennsylvania expects massive losses statewide for the upcoming financial quarter -- ranging from $4.4 billion to $4.86 billion total.

Johns Hopkins University (JHU), the umbrella organization which owns 50% of the Johns Hopkins Health System, announced on Tuesday the implementation of various cost-cutting measures, including salary freezes for all staff and faculty -- which includes health care workers at the organization -- the suspension of retirement contributions and a sweeping organization-wide hiring freeze. The salaries of higher-level employees like the university president, provost and deans were also cut.

Johns Hopkins Health System is the largest health system in Maryland and Johns Hopkins institutions are the largest non-government employer in the state. The new cuts at JHU signaled a startling reversal of fortunes. Before the pandemic, its leaders had projected JHU would bring in $72 million this year. Now, it expects to lose $100 million.

Beyond the loss of elective surgeries ​and services, JHU said it expects less income from student tuition and fees for things like on-campus housing and dining, and loss of philanthropic gifts.

Meanwhile, two of Michigan's largest health systems, Beaumont Health and Henry Ford Health System also announced this month they are laying off thousands of employees.

Beaumont Health, which says it has taken care of more COVID-19 patients than any other health system in Michigan, said it is temporarily laying off approximately 2,500 employees and permanently eliminating 450 positions, citing economic pressures. When reviewing its most recent fiscal quarter, it found net income dropped by approximately $400 million compared to the same quarter one year prior.

Henry Ford, located in Detroit, announced a mass furlough of approximately 2,800 employees across its six-hospital system. As of March 2020, it cited net losses of $234.5 million for the first quarter, a decrease of $354.9 million over the same period in 2019. "Furlough" is a mandated unpaid temporary leave of absence where the employee usually gets to return to their job in the future, in this case, presumably when the pandemic ends.

Wright L. Lassiter III, president and CEO of Henry Ford, described these layoffs as “painful” but necessary realities.

Integris Health, Oklahoma’s largest non-profit healthcare system, operating 19 hospitals across the state, closed one of its hospitals in Oklahoma City, and furloughed employees, cut executives’ pay, and suspended their retirement benefit contributions.

The most recent report from the Bureau of Labor and Statistics showed the health care workforce lost 43,000 jobs in March 2020, but at that time this was primarily due to job losses in dental offices and private physician offices, not layoffs from large healthcare institutions. But a lot has rapidly changed in the healthcare economic landscape since these numbers were released.

Even those working on the front line in COVID-19 hotspots are not immune. Dr. Bill O’Callahan, an emergency department (ED) physician outside of Boston, said, “In my ED group we’ve cut back our hours and cut pay by 30%... I anticipate bigger cuts coming.”

Amid the financial pinch, some groups of healthcare workers have turned to grassroots efforts. This month, the Emergency Nurses Association (ENA) created a relief fund with $200,000, money explicitly dedicated towards assisting emergency nurses experiencing financial hardship as a direct result of COVID-19. The ENA plans to grow this fund to be able to provide for more emergency nurses in need.

While the coronavirus curve in some areas seems to be flattening, experts say the hardship is far from over, and could be made all the more difficult as healthcare workers lose their jobs just when they're needed most.

What to know about coronavirus:

Jenny Wagnon Courts and Soo Rin Kim contributed to this report.

Nancy A. Anoruo, MD MPH is an internal medicine resident physician at the University of Massachusetts; and Heather J. Kagan, MD, is an internal medicine resident physician at The Johns Hopkins Hospital. Both are contributors to the ABC News Medical Unit.

Related Topics