COVID 19 Pandemic Forces Beaumont Health to Lay Off 2,475 Employees, Cut 450 Positions, Slash Exec Pay

In the first quarter of 2020, Beaumont's net income was -$278.4 million, a free-fall of $407.5 million over Q1 2019.

Beaumont Health has temporarily laid off 2,475 employees, eliminated another 450 jobs, and slashed executive pay to staunch the financial "hemorrhaging" created by the coronavirus pandemic.

Beaumont began caring for COVID-19 patients five weeks ago, and nearly all inpatient and outpatient surgeries and other non-COVID-19 medical services were shut down, while the number of patients seeking care unrelated to COVID-19 fell off after March 16.

In the first quarter ending March 31, Beaumont's net income was -$278.4 million, a plummet of $407.5 million over the first quarter of 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 quarter of 2020 was –$54.1 million, a $91.7 million decrease compared to the same time last year.

The first-quarter losses mounted even though the virus impacted the health system for the last two weeks of March, and Beaumont officials warned the losses could be much worse in the second quarter.

In a media availability on Tuesday announcing the cuts, Beaumont CEO John Fox, who will take a 70% temporary pay cut to his base salary, likened the health system's dilemma to "a tale of two cities."

"An absolutely outstanding performance by clinical teams who I cannot be more proud of in terms of how they responded without hesitation and handled more COVID-19 positive patients than any other system in Michigan by far," he said. "The other piece of that is by doing the most, we are also hemorrhaging the most in terms of cash, and we have to deal with that piece of the puzzle."

Fox declined to say how much he earns, saying "I'm not going down that rabbit hole" to multiple media requests on Tuesday. The Detroit Free Press reported that Fox's compensation was $5.6 million a year in 2017. Other top executives at the Royal Oak, Michigan-based health systems will take temporary cuts of up to 45%.

In addition to the layoffs and the salary cuts, Fox said the health system was forced to permanently eliminate 450 positions, most in corporate and administrative services, owing to uncertainty in the healthcare sector "well after the COVID-19 initial surge subsides."

"We must adjust the way we operate our organization moving forward," he said. "This pandemic has changed the delivery of healthcare, and we will be treating patients with this virus until we get a vaccine."

Beaumont, the state's largest health system, has 38,000 employees and operates eight hospitals across southeast Michigan.