Becker's Hospital Review

14 CFO / FINANCE Tenet furloughs 10% of staff; CEO donates to employee fund By Alia Paavola C iting a decline in elective surgeries and other nonemergent procedures due to the COVID-19 pandemic, Dal- las-based Tenet Healthcare has furloughed about 10 percent of its workforce of more than 113,000, according to Reuters. Affected employees include those in admin- istrative support roles, corporate office jobs and elective care. e 10 percent encompass- es all actions taken companywide in response to the pandemic as of April 15. About 3 per- cent of the furloughs affect hospital staff and occured the week of April 13. "Our expectation is that we can return impact- ed staff to service once we navigate through this unprecedented time and can return to provid- ing our full range of patient care services. ese actions do not impact direct bedside nursing care for COVID-19 and do not impact emer- gency or medically necessary care access for patients with other medical conditions," Tenet told Becker's Hospital Review. "We remain ap- propriately staffed to provide our full support to treat patients and prepare for a potential surge." Eligible furloughed employees will continue to receive medical benefits and 401(k) match contributions paid for by the health system, Tenet said. e health system is also provid- ing eligible employees access to information about state unemployment benefits. "For many eligible individuals and roles, these benefits could replace a significant majority of their income," Tenet said. e for-profit hospital operator has also start- ed a fund for employees financially affected by COVID-19. Tenet Executive Chairman and CEO Ron Rittenmeyer will donate 50 percent of his salary from April through June to the fund. In addition, other executives across the system said they would donate 10 percent to 20 percent of their salaries to the fund. Earlier in April, Tenet said it planned to fur- lough 500 employees, but the system said it will raise the number of furloughs due to the costly government-mandated suspension of elective procedures. n Beaumont reports $278M Q1 loss, cites pandemic By Alia Paavola S outhfield, Mich.-based Beaumont Health reported a net loss of $278.4 million in the first quarter of 2020, a decrease of $407.5 million compared to the same period one year prior. The health system said that the loss is largely due to the COVID-19 pandemic, which negatively affected operating and nonoperating income for the three-month period ended March 31. Beaumont saw its operating revenue fall to $1.07 billion in the first quar- ter of 2020, compared to operating revenue of $1.15 billion in the same period in 2019. In addition, the system saw its operating income drop $91.7 million year over year. Nonoperating losses for the first quarter totaled $224.6 million, compared to a nonoperating gain of $91.6 million in the same pe- riod in 2019. "The shelter-in-place order and community concerns about the vi- rus have led to significant reductions in emergency center visits, nonessential surgeries and diagnostic services. We believe these re- ductions will continue well into the second quarter and negatively impact financial performance in a significant way," Beaumont Health CFO John Kerndl said. To help improve its financial performance, Beaumont said it will defer all nonessential capital expenditures, fine-tune staffing levels and cut other expenses. "We will continue to explore and pursue all options and plans that will help our organization survive this crisis and return to a position of strength after COVID-19 is no longer a threat to our community," Mr. Kerndl said. n COVID-19 could accelerate depletion of Medicare hospital fund By Morgan Haefner M edicare's hospital fund will be depleted by 2026, but COVID-19 could acceler- ate that, according to an annual report from the board of trustees of the fund. The 2026 projection is in line with what last year's report said about Medicare's Hospital Insurance Trust Fund, otherwise known as Medicare Part A. The fund helps pay for inpatient hospital services, hospice care, skilled nursing and home health services provided to Medicare beneficiaries. In 2019, fund expenditures exceeded $5.8 billion. In 2026, revenue for the fund will only cover 90 percent of the program's costs, rendering the fund insolvent. The trustees said the exact projections in the analysis don't reflect potential effects of the COVID-19 pandemic due to the high uncertain- ty associated with the effects. But the trustees said the pandemic is likely to materially affect the assumptions the intermediate projections are based on. "Given the potential magnitude of the effects of the pandemic, it is conceivable that actual pro- gram experience could be worse than projected in the high-cost scenario, particularly in the near term," the trustees said. n

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