Pandemic impact leads to workforce reductions at Essentia Health
The hardships caused by the COVID-19 pandemic continue to grow across the nation and at Essentia Health. Essentia is not alone in facing the pandemic’s severe financial impacts. Minnesota hospitals and health systems expect to lose almost $3 billion in the first three months responding to COVID-19.
At Essentia, operational losses due to pandemic-related declines in patient volumes since the beginning of March have totaled nearly $100 million, with more losses on the horizon. Essentia has worked to offset the significant decline in revenue while prioritizing patient and staff safety.
Some of these changes have included: placing employees on administrative leave, flexing hours, reducing physician and executive leader compensation, restructuring and eliminating leadership roles, limiting capital expenditures and reducing services and discretionary spending.
While surgeries and procedures are restarting at the facilities, they are approaching that process carefully and slowly to protect communities, patients and staff, preserve personal protective equipment and ensure available hospital beds for COVID-19 patients.
“Despite our best efforts, the many cost-reduction measures we’ve taken over the last several weeks are not sufficient to preserve our mission and the health of the organization,” Essentia Health CEO Dr. David C. Herman said in a news release. “This has prompted our leadership team to carefully consider the most difficult decision we’ve faced since I joined Essentia five years ago and move forward with permanent layoffs.”
About 900 employees - about 6% of the workforce and including about 79 employees from the Brainerd lakes area - were affected by the layoffs. Essentia employs 1,535 people locally, including Essentia Health-St. Joseph’s Medical Center in Brainerd and its area clinics.
Essentia will continue to provide health insurance for noncontract employees for the next three months. Staff covered by collective bargaining agreements have other protections, including the right of recall. Additionally, there are about 850 Essentia employees on administrative leave with benefits through July 31, with the intention of being called back to work as needed.
“I recognize and deeply appreciate all our colleagues’ contributions,” Herman said in the news release. “While the COVID-19 crisis has resulted in significant shifts in society and how we care for our communities, our commitment to safe, high-quality patient care is unwavering. As painful as these actions are for all of us at Essentia, we are taking these steps to ensure Essentia is here to make a healthy difference in people’s lives, today and into the future.”