Henry Ford Health System in Detroit is temporarily laying off about 2,800 employees due to the financial impact of the COVID-19 pandemic. The layoffs are taking place this week across the six-hospital system and include workers not directly involved in patient care from areas where workloads have been reduced or operations temporarily closed.
Employees will keep their health care coverage and are eligible for unemployment benefits.
“I know that news concerning furloughs is painful – especially for an organization like ours, whose greatest strength has always been our people,” Wright Lassiter III, president and CEO of the health system, said in a systemwide email to employees. “We value each team member’s unique contribution, and this decision does not change that. But we must face these realities head on.”
The system has seen 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. Losses for April and May are expected to surpass March’s loss.
The health care system’s executive team and senior leaders also will begin contributing between 10 percent and 25 percent of their salaries to two funds created to help employees: the COVID-19 Emergency Needs Fund, established during the crisis, and the Bob and Sandy Riney Helping Hands Fund, established in 2012 by Henry Ford’s president of health care operations and COO Bob Riney and his wife, Sandy, to support employees experiencing unexpected hardship.
“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,” Lassiter continued. “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.”
As of March 31, Henry Ford’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-percent 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 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,” says Robin Damschroder, executive vice president and CFO of HFHS. “When it comes to federal assistance, we welcome an equitable, metrics-based allocation model that will help organizations like ours continue our mission.”
The health system has, in addition to its hospitals, a health plan and more than 250 sites. It was established in 1915 by Henry Ford.