Cash-strapped hospitals lay off thousands of health workers despite COVID-19 staff shortages

Thousands of medical workers are out of a job as the crisis exposes the perils of the for-profit health care system

By Igor Derysh

Managing Editor

Published April 18, 2020 10:00AM (EDT)

Public hospital health workers (AP Photo/Fernando Llano)
Public hospital health workers (AP Photo/Fernando Llano)

Hospitals across the country are laying off thousands of medical workers despite facing severe staff shortages as they treat an influx of patients infected with the coronavirus.

Hospitals have been feeling the effects of the pandemic for weeks as the number of coronavirus infections continued to rise, overwhelming medical systems and exhausting protective equipment stockpiles. But as the economic crisis continues to grow due to social distancing restrictions, for-profit hospitals are increasingly unable to maintain their staffing levels.

The Department of Veterans Affairs is racing to find enough new medical workers to staff hospitals in hard-hit areas like Detroit and New Orleans. It recently even sought to bring medical personnel out of retirement to assist with the crisis.

New York City Mayor Bill de Blasio pleaded for the federal government to assist his hard-hit city with staffing its hospital system.

"Unless there is a national effort to enlist doctors, nurses, hospital workers of all kinds and get them where they are needed most in the country in time, I don't see, honestly, how we're going to have the professionals we need to get through this crisis," he told MSNBC earlier this month.

Despite the growing need to find enough able medical workers to staff hospitals seeing an unprecedented number of patients, tens of thousands of medical workers have lost their jobs, in part due to state restrictions imposed to contain the virus spread.

Altarum, a nonprofit health research and consulting firm, reported last week that 43,000 health workers lost their jobs in just the first month of the crisis. Most of the losses were among non-hospital workers that are employed at physician and dentist offices that closed amid statewide lockdowns. However, the trend has now expanded to hospitals.

In Michigan, one of the areas hit hardest by the outbreak, Beaumont Health announced that it would lay off at least 300 workers at a Detroit-area hospital while the Detroit Medical Center furloughed about 480 employees.

The Medical University of South Carolina is laying off about 900 workers and asking full-time staff to take a 15% pay cut, according to the Charleston Post & Courier. Mercy Health, the largest medical system in Ohio, is temporarily cutting 700 workers, according to the Cincinnati Enquirer. Essentia Health, a top medical provider in Minnesota, is laying off 500 workers, according to the Duluth News Tribune. Two hospital systems in West Virginia will furlough about 1,000 workers, according to the Associated Press. The biggest health system in eastern Kentucky is cutting 500 workers, according to the Lexington Herald-Leader.

These layoffs are just the tip of the iceberg as hospitals face rising costs coupled with plummeting revenues. Hospitals have been forced to purchase unprecedented numbers of ventilators and personal protective equipment at exorbitant prices while also setting up drive-through testing sites. At the same time, many states and Surgeon General Jerome Adams directed hospitals to halt non-urgent surgeries in order to conserve protective equipment and bed space and prevent the spread of the virus to non-infected patients.

Elective surgeries make up a large part of hospital revenues. Beaumont Health, for example, earns about $16 million more than it spends in a typical month; now, it is losing about $100 million per month since the elective surgery ban, according to The Washington Post. Mercy First is also losing about $100 million each month. Virginia hospitals are expected to lose a combined $600 million in just 30 days.

"Elective surgeries are the cornerstone of our hospital system's operating model — and the negative impact due to the cancellations of these procedures cannot be overstated," Texas-based Steward Health Care said in a statement to NPR. "In addition, patients are understandably cautious and choosing to defer any non-emergency treatments or routine visits until this crisis has passed."

Many of the layoffs have hit workers who are not directly involved in treating coronavirus patients, executives told the Post, but the reduced staff has put a "strain" on health systems dealing with a surge of patients.  

"They may be in areas where there will be growth in the virus, which makes layoffs particularly alarming, because hospitals are gearing up or should be gearing up even in places where coronavirus is not an emergency as it in other parts of the country," Tricia Neuman, the head of the Medicare program at the nonprofit health research firm Kaiser Family Foundation, told the AP.

The layoffs have affected some staff critical to the coronavirus response. As AP reports, many nurse anesthetists in Pennsylvania have lost their jobs even though they are trained in intubations and managing patients on ventilators, skills which are needed to try to save patients with the most severe cases. 

Ben McGuire, a contract nurse in Oklahoma, said he was let go while "putting on my scrubs."

"It took me by surprise because we were super busy in the ICU [Intensive Care Unit] trying to save lives," he told ABC News.

These layoffs threaten to unravel much of the progress made in the fight against the virus.

"I'm concerned about the [financially] weakest 25 percent of hospitals, because there's no way the other hospitals can absorb their covid patients," Beaumont Health CEO John Fox told the Post. "If they start going down, that changes the whole algebra for the size of the system to handle the pandemic. That's when you're treating people on the front lawn."

The Health and Human Services (HHS) inspector general issued a report earlier this month warning that the cash crunch has undermined the nation's ability to combat the outbreak.

"Hospitals reported laying off staff due to financial difficulties, which further exacerbated workforce shortages and the hospitals' ability to care for covid-19 patients and the routine patient population," the report said. "One administrator stated that it had been 'an absolute financial nightmare for hospitals.' "

Hospitals have also been forced to spend up to 1,200% more on basic supplies like masks due to bidding wars with others desperate for supplies, according to the report.

The $2.2 trillion stimulus bill approved by Congress last month allocated $100 billion to help hospitals alleviate the pain. Yet experts say that is not enough, since the hospital industry sees about $100 billion in revenues in just a single month.

The Trump administration has also taken steps that could leave the worst-off hospitals out of luck. Seema Verma, the administrator of the Centers for Medicare and Medicaid, said that the first $30 billion of the aforementioned allocation will be doled out based on the volume of Medicare recipients billed by hospitals. That could leave hospitals that treat higher numbers of Medicaid recipients and the uninsured without any assistance, as those patients are left out of the aid calculation.

The rest of the money would theoretically go to the other hospitals, but President Donald Trump announced earlier this month that the administration would dip into the hospital fund to cover the cost of coronavirus testing and treatment for uninsured patients after he refused to open a special Obamacare enrollment period instead. The Kaiser Family Foundation estimated that the plan will cost up to $42 billion of the remaining $70 billion allocation.

This could leave hospitals that primarily treat low-income workers and uninsured patients "in the greatest need of funding support," warned Bruce Siegel, the head of America's Essential Hospitals.

The American Hospital Association called on Verma and HHS Secretary Alex Azar to allocate funds based on need by providing $30,000 per every occupied bed in "hot spots" like New York and Detroit, and $25,000 per bed to every other hospital.

"In addition, all types of hospitals, including rural and urban short-term acute-care, long-term care and critical access hospitals, as well as inpatient rehabilitation and inpatient psychiatric facilities, are incurring expenses related to COVID-19 as they work to treat patients and expand the capacity of the health care system," the organization said. "Thus, all types of hospitals must be eligible for funds."

Fox told The Post that even this massive expenditure would only "take care of April."

Asked how much he believed hospitals needed to ride out the crisis, he replied, "tell me how long the virus lasts, and I can answer that."

The uncertainty has left many health workers, who have been accurately praised as heroes during the crisis, stuck in limbo. Colby Pacheco, a contract nurse in Oklahoma, said he was considering traveling to a hotspot to find work as he faces a potential furlough.

"It's a weird position to be in as a nurse, not knowing if you'll have a job during a pandemic," Pacheco told ABC News. "I just hope big business doesn't get in the way of nurses doing their jobs and helping people."

By Igor Derysh

Igor Derysh is Salon's managing editor. His work has also appeared in the Los Angeles Times, Chicago Tribune, Boston Herald and Baltimore Sun.

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Aggregate Alex Azar Coronavirus Donald Trump Hospitals Pandemic Seema Verma