Tenet furloughs 10% of staff; CEO donates to employee fund

Citing a decline in elective surgeries and other nonemergent procedures due to the COVID-19 pandemic, Dallas-based Tenet Healthcare has furloughed about 10 percent of its workforce of more than 113,000 to date, according to Reuters.

Affected employees include those in administrative support roles, corporate office jobs and elective care.  The 10 percent encompasses all actions taken companywide in response to the pandemic to date. About 3 percent of the furloughs affect hospital staff and are occurring this week.

"Our expectation is that we can return impacted staff to service once we navigate through this unprecedented time and can return to providing our full range of patient care services. These actions do not impact direct bedside nursing care for COVID-19 and do not impact emergency or medically necessary care access for patients with other medical conditions," Tenet told Becker's Hospital Review. "We remain appropriately 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. The health system is also providing 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.

The for-profit hospital operator has also started 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 furlough 500 employees, but it now it says it will raise the number of furloughs after the costly government-mandated suspension of elective procedures. 

Citing financial uncertainty brought by the COVID-19 pandemic, in early April, Tenet revised its previously announced guidance for the first quarter and full-year of 2020. Tenet is still expected to announce its first-quarter results in May, and at that time should have a better idea about the full-year guidance. 

Tenet CFO Dan Cancelmi said in an investors presentation April 2 that the company is working on several ways to raise cash on hand. 

It recently completed a debt offering of $700 million to pay off debts and other capital needs. 

In addition, Tenet is working to increase the borrowing capacity of its revolving line of credit to $2 billion, a boost of $500 million.

Tenet also expects to generate proceeds of $350 million when the sale of its Memphis hospitals closes later this year.

Tenet operates 65 hospitals and more than 500 other medical facilities in the U.S.

More articles on healthcare finance:
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Mayo Clinic projects $900M shortfall, implements cost-cutting measures
State-by-state breakdown of 354 rural hospitals at high risk of closing

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