April 6, 2020

Health care workers aren't safe from coronavirus-related job losses

Daily Briefing

    Nearly 10 million Americans have lost their jobs in just the last two weeks due to the economic disruption caused by the new coronavirus—and tens of thousands of health care providers are among those facing unemployment, even as the nation's demand for health care surges.

    Layoffs throughout the health care industry

    According to the Labor Department, nearly 10 million people have applied for unemployment benefits in the two weeks since major coronavirus-related job losses began. While it's not yet clear how many of those people worked in health care, the Bureau of Labor Statistics reported that in March, before the economic impact of the crisis fully took hold, employment in the U.S. health care sector fell by about 61,000 jobs.

    So why is health care—the sector of the economy that, in many ways, is most in-demand during the epidemic—facing such significant job losses?

    One factor is that, to prepare for an onslaught of Covid-19 patients, CMS encouraged hospitals and private practices to cancel elective surgeries. However, these procedures often serve as key sources of revenue for hospitals. As Mary Dale Peterson, president of the American Society of Anesthesiologists, said "Elective surgeries are the lifeblood of many hospitals, if not all hospitals."

    Further, many primary and urgent care providers are seeing declining visits as patients skip routine or nonessential care. While some providers have pivoted quickly to seeing more patients via telehealth, many have nonetheless faced a decline in patients and, ultimately, less revenue.

    According to a report from HealthLandscape and the American Academy of Family Physicians, an estimated 60,000 family practices by June will close or scale back their businesses significantly, and 800,000 employees will be laid off, furloughed, or see reduced hours, representing 43% of the 1.9 million people employed at family medicine practices.

    Atrius Health, an independent physician group in Massachusetts, said its patient volume has dropped 75% since the middle of March, and as a result, the group is temporarily closing offices, furloughing staff, and temporarily withholding a percentage of pay from the offices that are staying open. Atrius said employees earning less than $55,000 a year are exempt from the withholding and that all withheld pay will eventually be paid out.

    Steven Strongwater, Atrius' CEO, said "What we're trying to do is piece together a solution to get through the crisis and keep employed as many people as we can."

    Similarly, Alteon Health, a medical staffing company, said it has seen a 30% decline in its ED and hospitalist programs and will be cutting pay by 20% for all of its employees, while executives will see 25% pay cuts.

    Hospitals and health systems also are taking a hit. Beth Israel Lahey Health announced on Monday that executives would see pay cuts of 20%, while CEO Kevin Tabb will be taking a 50% pay cut. "The suspension of elective procedures and decline in visits to our primary care practices and urgent care centers have resulted in financial challenges," Tabb wrote in an email to employees.

    Meanwhile, Bon Secours Mercy Health said Tuesday it is anticipating losses of $100 million a month, which means certain nonclinical employees will be furloughed. John Starcher, president and CEO of Bon Secours, wrote in a letter to employees, "Our resources—people, supplies, and finances—must be dedicated specifically to responding to Covid-19."

    A spokesperson for Bon Secours said the company has set aside $60 million to assist employees who will face significant financial hardship as a result of being furloughed, and that the furloughs are expected to last 30 to 90 days (Bebinger, WBUR/Kaiser Health News, 3/30; Leonard, Business Insider, 4/2; Norvell/O'Donnell, USA Today, 4/2; Rayasam et. al., Politico, 3/29; Casselman and Cohen, New York Times, 4/2).

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