The Duluth, Minn.-based health system is facing $100 million in losses due to declines in patient volumes since the beginning of March. Essentia has taken several steps to help offset those losses, including placing 850 employees on administrative leave, reducing physician and executive compensation, eliminating certain leadership roles and limiting capital spending. The health system said it is now forced to permanently reduce its workforce.
“Despite our best efforts, the many cost-reduction measures we’ve taken over the last several weeks are not sufficient to preserve our mission and the health of the organization,” Essentia Health CEO David C. Herman, MD, said in a news release. “This has prompted our leadership team to carefully consider the most difficult decision we’ve faced since I joined Essentia five years ago and move forward with permanent layoffs.”
Essentia said it will continue to provide health insurance for noncontract employees affected by layoffs for the next three months. The health system said the 850 employees on administrative leave will be called back as needed.
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