Hospitals Furloughing Staff, Altering Physician Pay Due to COVID-19

UPDATED 04/02/2020 3:00 PM EST to include a statement from Intermountain Healthcare.

Utah-based Intermountain Healthcare made headlines earlier this week after announcing changes to physician and advanced practice practitioner (APP) compensation arrangements due to COVID-19.

In a video released on YouTube on March 26, the health system’s chief physician executive Mark Briesacher, MD, announced potential contract amendments to create flexibility for physicians and APPs who may be facing reduced pay because of the cancelation or postponement of their work.

Some staff are seeing extremely high demand because of COVID-19, but other physicians and APPs on work relative value unit (wRVU) contracts are seeing a reduction in clinical work between 30 and 50 percent, Briesacher reported.

To mitigate those losses, Intermountain plans to make an adjustment for some providers by May 31. The health system is also evaluating contracts, including shift-based and salary models, to assess their impact on clinical work, Briesacher stated.

“We’re in a dynamic and challenging environment with this pandemic and we’re mindful of the personal impact on everyone, especially on the thousands of physicians and caregivers whose daily work has been postponed, canceled, or seen a decline. This is a critical time for physicians to be flexible to the changing needs created by COVID-19,” he said in the video.

The announcement prompted local news outlets to report that Intermountain is cutting physician and APP compensation in a move that is financially necessary during the pandemic.

Intermountain spoke out against the headlines, saying the health system is not reducing compensation for physicians and APPs.

“Intermountain has cut nobody’s salary. Not a single person’s,” Marc Harrison, MD, Intermountain’s president and CEO, said in another video posted to YouTube on March 31. Harrison added that the health system is trying to ensure employed physicians and APPs on wRVU contracts don’t make less than 85 percent of their base salaries during the public health crisis by redeploying staff to needed areas and allowing for four weeks of administrative time for some providers.

A spokesman from Intermountain confirmed to RevCycleIntelligence that no physicians or other staff have taken a pay cut as a result of the pandemic. In fact, the health system is moving forward with scheduled annual pay increases this month, Daron Crowley explained.

The physicians and APPs in question in the report represent a small portion of the providers at Intermountain and have volume-based contracts, which means their pay is primarily dependent on the volume of services rendered. To prepare for an influx of COVID-19 patients, however, many of those services have been canceled, resulting in potential compensation reductions for those providers.

Intermountain is doing everything it can to keep all providers employed during this difficult and uncertain time, Crowley stressed. The health system plans to ensure pay for providers in volume-based contracts does not dip below 85 percent of their typical compensation. Providers may be deployed when appropriate to ensure employment and help the system prepare for the surge of patients in COVID-19. Providers seeing reduced clinical work may be moved to help other areas of the health system, including its virtual hospital which is experiencing an uptick in virtual interactions with patients during the pandemic.

Intermountain is just one of many healthcare organizations attempting to navigate an uncertain financial future due to COVID-19, and providers at some of those organizations have not been as lucky.

The Boston Globe reported on March 31 that Boston Medical Center put 700 employees on furlough – about 10 percent of its workforce – as the organization anticipates financial losses from COVID-19.  Other Boston-area organizations, including Atrius Health and Steward Health Care, have also announced furlough programs, the report stated.

Essentia Health, an integrated health system serving communities in Minnesota, Wisconsin, and North Dakota, also recently announced a reduction of non-medical staff as the organization prepares for a surge of COVID-19 patients. The health system also plans to redeploy some of its workforce to increase capacity for treatment and protect its staff from financial impacts from the pandemic.

Meanwhile, other healthcare organizations like Tenet Healthcare are having to reconsider compensation packages, such as 401(k) match programs, in light of the new COVID-19 reality.

Operational disruptions from COVID-19 are forcing some hospitals and health systems to make tough choices regarding their workforce.

According to experts at healthcare consulting firm Kaufman Hall, healthcare organizations are experiencing severe capacity shortages and service mix shifts, as volumes for procedures that normally drive revenue significantly decline. Organizations are also facing workforce and supply chain disruptions, as well as balance sheet stress as the value of invested assets fall.

This is creating financial stress for hospitals and health systems, which were already up against tight operating margins before the pandemic.

On top of that, new research shows that, even with a Medicare rate boost authorized by the recent coronavirus stimulus package, hospitals are set to lose over $1,000 per COVID-19 hospitalization.

Playing defense financially is a good strategy for hospitals and health systems right now, says Eric Jordahl, a managing director at Kaufman Hall.

“The main message is play defense as much as you can and really focus on locking things down,” he recently told RevCycleIntelligence. “Think about how much liquidity your organization has and how quickly you can access liquidity.”

Paying more attention to clinical documentation can also help organizations recover from the looming claims management and revenue capture issues to come.

“There's a lot of confusion over what the blanket waivers cover versus what happens under specific waivers versus what governors are stating,” said Delphine O’Rourke, partner at Duane Morris and former associate general counsel for Ascension. “We find in emergencies, that for months and years afterward, you are dealing with payment and insurance issues.”

“This needs to be documented,” she stressed in an interview with RevCycleIntelligence.

This may be the new normal for hospitals and health systems for the next couple of months even with $100 billion coming down the pipeline from the recent stimulus package. Balancing cost containment strategies with ensuring staff and patients get the support they need will be key to weathering the storm.