Jordan Ellis
Despite the high demand for healthcare workers during the COVID-19 pandemic, hospitals are laying off employees at the highest rate since 1990. This is due to a combination of factors, including a lack of everyday business, a decline in non-COVID-19 patients, and hospitals barring non-COVID-19 patients to prevent the healthcare system from collapsing. Hospitals are also facing financial strain due to the high costs of protective gear and other pandemic-related expenses. As a result, hospitals are being forced to make difficult decisions to stay afloat, including reducing staff hours, furloughing, and laying off employees.
| Characteristics | Values |
|---|---|
| Hospitals laying off workers | California, Texas, Michigan, Kentucky, West Virginia, Washington, New York |
| Reasons for lay-offs | Lack of revenue due to a decrease in patients, especially for elective procedures |
| Impact | Loss of jobs, reduced hours, pay cuts |
| Government response | Insurance coverage, supplementing government assistance, loans from Paycheck Protection Program |
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What You'll Learn
Hospitals are laying off non-medical staff first
The American healthcare workforce is being hit hard by the economic fallout of the pandemic, with 43,000 health care workers laid off in the first month of the Covid-19 outbreak, according to Altarum, a nonprofit research and consulting firm. This is a historical aberration, as the healthcare sector has typically been cushioned from deep job cuts during economic downturns.
Hospitals are starting with non-medical staff for furloughs and reduced hours to soften the impact on medical capacity. However, it is unclear how long medical systems can avoid cutting doctors and nurses as well. The largest hospital system in eastern Kentucky laid off 500 workers, and the Medical University of South Carolina in Charleston laid off 900 people from its 17,000-person staff.
Some hospitals are also implementing pay cuts for executives and other high-level staff to reduce costs. For example, Spectrum Health in Grand Rapids has not announced layoffs, but executives are taking pay cuts, including a 40% reduction for the CEO. Other hospitals are instituting hiring freezes and suspending employer matches to retirement plans to cut costs.
The layoffs and furloughs in the healthcare sector are particularly surprising given the perception that healthcare workers are in high demand during the pandemic. However, the reality is that hospitals are facing significant financial challenges due to the suspension of routine procedures and patients' hesitancy to seek non-urgent medical care.
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Loss of revenue from elective procedures
Hospitals are laying off workers during the COVID-19 pandemic due to a loss of revenue from elective procedures. Elective procedures are often the "bread and butter" of hospitals, but many of these procedures have been indefinitely suspended to make room for potential COVID-19 patients and reduce contact between people. This has resulted in a significant decrease in revenue for hospitals, as these procedures are no longer bringing in the same level of income.
For example, Bronson Hospital in Kalamazoo has experienced a 50% revenue loss due to the suspension of elective procedures and is planning hundreds of temporary layoffs as a result. Similarly, Munson Healthcare in Michigan has reported losses of up to $10 million per month during the pandemic, leading to layoffs for a portion of its staff. In California, hospitals are also struggling due to a lack of non-COVID patients, resulting in furloughs and layoffs despite the state's slow reopening.
The loss of revenue from elective procedures has had a significant impact on the financial stability of hospitals, and this has been further exacerbated by the additional costs associated with the pandemic, such as the need for personal protective equipment (PPE) and increased staffing requirements. In some cases, hospitals have had to purchase PPE at higher prices due to supply chain disruptions, further adding to their financial burden.
To cope with the loss of revenue, some hospitals have implemented cost-cutting measures such as pay cuts for executives, hiring freezes, and suspension of employer-matched retirement contributions. However, these measures have not always been enough to prevent layoffs, as hospitals struggle to stay afloat financially. It is important to note that the economic disruption caused by the suspension of elective procedures is likely to persist even after the pandemic, as patients may be hesitant to return to hospitals that have been associated with the virus.
Overall, the loss of revenue from elective procedures has been a significant contributing factor to hospital layoffs during the COVID-19 pandemic. The suspension of these procedures has had a ripple effect on the financial stability of hospitals, leading to difficult decisions and challenging consequences for both healthcare workers and the wider economy.
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Hospitals are quiet, with fewer patients
The cancellation of elective procedures and routine screenings has significantly impacted hospital revenues. These procedures are often the primary source of income for hospitals, and the loss of this revenue stream has resulted in financial strain and layoffs. Hospitals in Italy, Spain, and elsewhere were overwhelmed by COVID-19 patients, but this was not the case in many other regions. The decision to suspend non-urgent procedures was meant to save healthcare systems from collapse, but it has inadvertently led to hospitals laying off staff as revenues plummeted.
The economic disruption caused by the pandemic is expected to persist as long as hospitals continue to restrict routine procedures. Even as restrictions are lifted, patients may be hesitant to return to hospitals, which have been associated with viral hotspots. This could further prolong the financial strain on hospitals and delay their recovery. The American healthcare workforce is facing a dual challenge of managing the coronavirus and the economic crisis, which is driving physician practices and hospitals to furlough or lay off staff.
The layoffs in the healthcare sector have significant implications for the economy as well. Hospitals are one of the largest private sector employers in California, contributing around $260 billion to the state's economy. The California Medical Association reported that half of the doctors had to furlough or lay off employees, and 80% of small practices experienced revenue declines by mid-March. The impact of the pandemic on the healthcare sector extends beyond the immediate challenge of managing COVID-19 cases, highlighting the complex interplay between public health and economic stability.
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Healthcare workers are being redeployed
While hospitals have been laying off workers during the coronavirus pandemic, many healthcare workers are being redeployed.
In Boston, a spokesman for Partners HealthCare, which includes 12 hospitals, said staff members whose work has decreased are being deployed to other areas. However, redeployment is not always an option. For example, many operating room nurses trained in specialized procedures have been furloughed because their training did not translate to other roles.
In California, the California Medical Association said a survey of 3,000 physicians found that half had to furlough or lay off employees, but 80% of small practices reported revenue declines by mid-March. Despite this, some doctors have been able to keep their staff working with loans from the Paycheck Protection Program.
In the UK, the NHS has issued guidance on increasing the critical care nursing workforce. Nursing staff are being categorized into three groups: A) nurses, midwives, and AHPs with relevant transferable skills; B) registered nurses with no critical care skills; and C) nursing support workers. Training and consistency of knowledge and skills are key, and the guidance makes specific recommendations for delivery and sequencing of training.
Optometrists and dispensing opticians are also being redeployed on a voluntary basis, as most routine eye examinations have ceased.
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Economic crisis and job insecurity
The COVID-19 pandemic has resulted in an economic crisis that has had a significant impact on hospitals and healthcare systems, leading to job insecurity and layoffs. Hospitals are typically major employers and significant contributors to local economies. However, the pandemic has disrupted their regular operations and revenue streams, forcing them to make difficult decisions to stay afloat.
One of the primary reasons for the financial strain on hospitals is the decline in elective procedures and routine screenings. To prepare for a potential influx of COVID-19 patients and reduce the risk of exposure, hospitals were advised to postpone or cancel non-essential procedures. While necessary from a public health perspective, this had a significant financial impact as these procedures are often significant revenue generators for hospitals. This resulted in a substantial drop in income for hospitals, with some reporting losses of up to $10 million per month.
The pandemic has also led to a decrease in patient volume for both hospitals and doctors' offices. People have been hesitant to seek medical care due to the fear of contracting COVID-19 in healthcare facilities. This has resulted in a further reduction in revenue for hospitals, as they rely on patient admissions and procedures for income. Additionally, the pandemic has disrupted supply chains and increased expenses for personal protective equipment (PPE) and other infection control measures, adding to the financial strain on hospitals.
The economic crisis has forced hospitals to make cost-cutting measures, including layoffs, furloughs, and pay cuts. While some hospitals have started with non-medical staff, others have had to lay off medical professionals, including doctors and nurses. This has resulted in job insecurity and unemployment for healthcare workers, even as they are hailed as heroes on the frontlines of the pandemic. The impact of these layoffs extends beyond individual workers, as it also reduces the healthcare capacity and makes it more challenging to control the spread of the virus.
The COVID-19 pandemic has highlighted the vulnerability of the healthcare sector to economic downturns. While healthcare has traditionally been a stable industry during economic crises, the unique circumstances of the pandemic have reversed this trend. Hospitals, particularly smaller and rural ones, are struggling to stay afloat financially, and the long-term impact on the healthcare sector remains to be seen.
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Frequently asked questions
Hospitals are laying off workers due to a decline in revenue. This is a result of a decrease in everyday business, including routine screenings, surgeries, and checkups, as well as a lack of COVID-19 cases in some areas.
Hospitals are experiencing significant financial losses due to a reduction in patient volume and routine procedures. For example, Munson Healthcare in Michigan reported losses of up to $10 million per month during the pandemic.
Hospitals are implementing various measures to cut costs, including furloughs, reduced hours, pay cuts for executives, and layoffs. Some hospitals are also cross-training staff to work in different units and providing supplemental pay to furloughed workers.
No, the impact varies across hospitals. While some hospitals have announced layoffs, others have not been affected to the same extent. However, it is likely that most hospitals will experience some financial strain during the pandemic.
