Published in Health Care
Spectrum Health issues layoffs in wake of ‘dramatic’ financial blow from COVID-19 response COURTESY PHOTO

Spectrum Health issues layoffs in wake of ‘dramatic’ financial blow from COVID-19 response

BY Tuesday, May 05, 2020 06:12pm

GRAND RAPIDS — Spectrum Health has been laying off staff in the last week, citing a “dramatic” financial hit from the COVID-19 pandemic that’s left hospitals unable to perform elective and non-emergency surgeries and procedures and driven up expenses.

The Grand Rapids health system won’t say how many jobs it’s cutting. As of Tuesday, Spectrum Health had not yet filed a notice with the state that’s required under state law for mass job cuts.

Spectrum Health had said three weeks ago that it planned to aggressively cut costs.

“As we announced April 17, the financial impact of COVID-19 on our health system has been dramatic. Our revenue is decreasing, and expenses have increased as a result of this pandemic. This financial impact is far-reaching and will suppress our health system’s revenues for the remainder of the year, making a course correction imperative,” the health system said last week in a statement to MiBiz. “With the accelerated rate of change in the organization’s operations, there will be some positions that will not be needed in the future. Roles that are being eliminated are not ones that care for patients. We made very difficult decisions that will reshape our organization going forward. We must act responsibly for the long-term, so that Spectrum Health can serve our communities for years to come.”

Spectrum Health also has cut executive pay and planned to halt contributions to employee retirement accounts from July through December.

President and CEO Tina Freese Decker took a 40-percent pay cut and her direct leadership team got a 30-percent reduction.

A number of other health systems and hospitals in the state, including Mercy Health in Grand Rapids and Muskegon and Bronson Healthcare in Kalamazoo, have furloughed non-clinical employees and cut executive pay in response to the financial hit from the COVID-19 pandemic.

Spectrum Health is the largest employer in West Michigan with more than 31,000 employees.

In 2019, Spectrum Health recorded operating revenue of $7.26 billion, $3.9 billion of which was generated by health plan Priority Health, according to financial data posted online.

Spectrum Health had $332.1 million in net operating income. Combined with $419.5 million in investment income, minus expenses such as debt and pensions, Spectrum Health ended 2019 with $608.5 million in excess revenue over expenses, according to a 2019 audit report.

The financial report online noted that at the end of 2019, Spectrum Health had 230.2 days of cash on hand.

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