'Extraordinary impact' of virus: Beaumont lays off nearly 2,500 and eliminates 450 jobs

April 21, 2020, 9:09 AM

Painful drama at Beaumont Health on Tuesday morning relates to coronavirus, and involves staff rather than patients. 

The eight-hospital hospital network, based in Royal Oak, cites "financial consequences of the Covid-19 pandemic" as it lays off 2,475 employees and eliminates 450 positions because of "significant losses during the first quarter. ... The system expects the second-quarter financials to be challenging as well."

The actions affect 7.7% of its 38,000 employees. Those whose jobs are dropped get undisclosed severance payments.

"Most [layoffs] involve hospital administrative staff and others who are not directly caring for patients with or without Covid-19," a media release says. "Most of the 450 position eliminations are part of the corporate staff or are serving in other administrative roles." It adds:

Beaumont Health CEO John Fox will take a 70% temporary pay cut to his base salary. The other members of Beaumont’s executive leadership team will also take temporary pay cuts up to 45% of their total compensation. 

The Royal Oak flagship on 13 Mile Road at Woodward Avenue. (Photo: Facebook)

That leadership team has other six men and five women. Fox's annual compensation, including bonuses and deferred income, is $5.6 million.

The chief executive is quoted as saying: "We never want to have to make decisions like this, but no one could have predicted the extraordinary impact this virus would have on health care and society overall."

"Parts of our operations have drastically declined or ceased. We must make difficult, quick decisions now to protect and readjust to an uncertain future.

"We also expect economic pressures on Beaumont and the health care industry to continue well after the COVID-19 initial surge subsides, which is why we made the difficult decision to eliminate 450 positions. We must adjust the way we operate our organization moving forward.

"This pandemic has changed the delivery of health care, and we will be treating patients with this virus until we get a vaccine."

John Fox: "We must make difficult, quick decisions." (Photo: Beaumont Health)

Beaumont has hospitals, emergency centers and clinics in Wayne, Dearborn, Farmington Hills, Grosse Pointe, Taylor, Trenton, Troy and Canton. 

Tuesday's handout lists this financial data:

  • In the first quarter, which ended March 31, Beaumont’s net income was $278.4 million, a decrease of $407.5 million over the same period in 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 three months of 2020 was $54.1 million, a $91.7-million decrease compared to the same time last year. 

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