VIRGINIA — Essentia Health on Thursday announced 900 layoffs as state health providers continue to wrestle with the financial fallout of the COVID-19 pandemic.
About 55 percent of the job reductions are located in the Twin Ports area and 15 percent in regional locations across northeast Minnesota and northwest Wisconsin. The layoffs account for 6 percent of Essentia’s total workforce.
The layoffs are expected to impact non-clinical staff responsible for indirect patient care, about 80 percent, and 20 percent in direct patient care.
Dr. Jon Pryor, president of Essentia Health’s East Market, said in an interview Thursday that the job cuts aren’t expected to impact everyday health care services.
“Part of that is because we’ve been so innovative with virtual visits,” Pryor said. “We’re really working at making sure this is a safe environment that people can come back to and get their care.”
Hospitals are feeling the squeeze from the pandemic after elective surgeries were suspended in March. State officials green-lighted procedures earlier this month despite concerns over proper volumes of personal protective equipment, but Pryor said patients are still concerned about visiting clinics and encouraged people to seek the care they need for COVID-19 and other conditions.
The Minnesota Department of Health on Thursday reported a new one-day high of 32 deaths from COVID-19, raising the state’s death toll to 809, with 539 newly confirmed cases for a total of 18,200. The number of people hospitalized with the disease reached a one-day high of 566, with 229 patients in intensive care, tying highs set Monday and Tuesday.
Health systems across Minnesota are all expecting big losses — an estimated $3 billion in the first three months of the pandemic — but were instrumental in guiding the state’s early response to the coronavirus and understood the economic impact was coming.
Pryor said Essentia acted early to cut costs through limited capital spending, decreased discretionary funding and cuts to leadership roles. CEO David C. Herman, M.D., took a 40 percent pay cut and other leaders accepted a 30 percent salary reduction.
Furloughs and decreased or rotating hours were also implemented, Pryor said, but were “clearly not enough.”
Since March, the Duluth-based Essentia Health system has lost nearly $100 million in revenue and anticipates a loss of millions more in the coming months. Layoffs and other cost-reducing efforts are projected to save about $50 million annually.
Essentia’s newest round of layoffs brings the total number of workers impacted by the pandemic to 1,750, including 850 placed on administrative leave through July 31. Essentia is paying three months of health benefits to laid off employees who have been with the company more than a year. Those making more than $76,000 annually will receive two weeks severance pay, while others will receive unemployment and CARES Act funding of $600 weekly through the federal government.
Health care jobs made up about 27 percent of total jobs in St. Louis County in 2019, according to the Minnesota Department of Employment and Economic Development. The region’s second and third-largest employment sectors retail trade and accommodation and food service, which account for about 22 percent of the county’s workforce, have faced closures or reductions due to COVID-19 and executive orders issued by Gov. Tim Walz.
Since March 15, at least 24.2 percent of the county’s labor force have filed for unemployment benefits, per DEED data, a total of 24,966 as of Thursday. On Monday, the stay-safe order issued by Walz went into effect allowing retailers to open at limited capacity, while bars and restaurants can open for outdoor dine-in services on June 1.
The layoffs at Essentia will hit St. Louis County particularly hard with 55 percent of the employees losing their jobs at locations in the Twin Ports area and 15 percent are in the East Market that has locations in Virginia and Hermantown. Less than 10 percent are located in Brainerd and less than 20 percent are in the Fargo, N.D. and Detroit Lakes areas. Other East Market locations impacted include Deer River and Superior, Wis.
“It’s devastating,” Pryor said. “Direct or not, everyone is involved in our patient care, that’s what makes this so difficult.”
Long-term changes in health care due to COVID-19 are expected and hundreds of jobs likely won’t return as a result. About 25 percent of statewide virtual visits go through Essentia, Pryor said, and he predicts the industry will reflect retailers like Amazon in the sense of bringing more services to customers at their convenience.
In that sense, Pyor foresees telehealth and more on-demand services to continue after the pandemic, noting clinics could open earlier, close later and open on the weekends to better accommodate patients.
“People want more access to care when they want it,” he said, calling the increase in virtual visits the “tip of the iceberg” on accessing care through technology and new processes, especially in rural areas where access is already limited. “We want to be innovative. We can’t be doing it the same old way.”
Pryor added that Essentia is continuing construction on its $800 million Vision Northland project, a new hospital and infrastructure funded by bonds that can only be used for construction. Halting construction would result in paying that money back with a stiff penalty.
The coronavirus is changing the way Essentia is envisioning the inside of the building, he said, adding that COVID-19 likely won’t be the last pandemic. The health provider is making interior modifications that include isolation rooms and is also reconsidering how common areas look.
“The silver lining is that at a time of recession, that large building is a local stimulus to the economy,” Pryor said.