CEO will take a 70% pay cut, other executives will take pay cut up to 45%; Beaumont has proudly cared for more COVID-19 patients than any other system in Michigan
The financial consequences of the COVID-19 pandemic has forced Beaumont Health, like other health care organizations throughout the country, to adjust its workforce after the organization suffered significant losses during the first quarter. After Beaumont began caring for COVID-19 patients five weeks ago, nearly all inpatient and outpatient surgeries and other non-COVID-19 medical services had to be halted. In addition, the number of patients seeking care unrelated to COVID-19 dramatically declined after March 16.
As a result, Beaumont, which has 38,000 employees, is temporarily laying off 2,475 employees, permanently eliminating 450 positions and cutting executive pay. Beaumont Health CEO John Fox will take a 70% temporary pay cut to his base salary. The other members of Beaumont’s Executive Leadership Team will also take temporary pay cuts up to 45% of their total compensation. Of the 2,475 temporary layoffs, most involve hospital administrative staff and others who are not directly caring for patients with or without COVID-19. Most of the 450 position eliminations are part of the corporate staff or are serving in other administrative roles.
“I am extremely proud of our team’s rapid response to COVID-19. While many front-line employees have never been busier, other parts of our operations have drastically declined or ceased. We must make difficult, quick decisions now to protect and readjust to an uncertain future,” Fox said. “We also expect economic pressures on Beaumont and the health care industry to continue well after the COVID-19 initial surge subsides, which is why we made the difficult decision to eliminate 450 positions. We must adjust the way we operate our organization moving forward. This pandemic has changed the delivery of health care, and we will be treating patients with this virus until we get a vaccine.”
In addition, Beaumont will pause or cancel some nonessential projects. Beaumont will also continue to strongly advocate for federal and state assistance to rescue the health care industry and provide meaningful financial relief.
In the first quarter, which ended March 31, Beaumont’s net income was -$278.4 million, a decrease of $407.5 million over the same period in 2019. Operating revenue fell to $1.07 billion, a $78.2 million decrease over the $1.15 billion reported in the first quarter of 2019.
Net operating income for the first three months of 2020 was -$54.1 million, a $91.7 million decrease compared to the same time last year. It should be noted that Beaumont was only impacted by the virus for the last two weeks of March. The system expects the second quarter financials to be challenging as well.
“Through this crisis, we have dramatically changed the way we care for patients. We have seen exponential growth in telehealth, new approaches to staffing and a regional perspective to deploy resources and assets,” Fox added. “We will continue to adapt our health care system to deliver the best, compassionate, extraordinary care every day. Despite an uncertain future, I am confident Beaumont will emerge from this crisis as a strong organization.”
Temporarily laid-off employees can apply for enhanced unemployment benefits available through state and federal programs. As additional medical services are brought back online at all our campuses, including Wayne, employees could be asked to return to their roles. These individuals can also continue to participate in their Beaumont health insurance and other benefits at their current employee rates during the layoff period.
Those whose jobs are eliminated will receive a lump-sum severance package and will likely be able to take advantage of enhanced state and federal unemployment benefits. These employees will have the option to continue their benefits at current employee rates through their severance period.
Impacted employees will be eligible to apply for other open positions at Beaumont and given priority.
“We will do everything we can to assist our employees affected by these changes. We never want to have to make decisions like this, but no one could have predicted the extraordinary impact this virus would have on health care and society overall,” Fox said.