FARGO — Essentia Health will lay off about 900 employees — including 178 in its Fargo region — to bring expenses in line with revenues that have plunged $100 million because of the coronavirus pandemic.
The cuts, announced Thursday, May 21, represent about 6% of Essentia’s workforce. Essentia’s west region, with its headquarters in Fargo, will comprise about a fifth of the cuts.
Positions eliminated include 148 in administrative services such as finance or human resources and 30 others dispersed throughout the west region, which includes Fargo, West Fargo, Jamestown and Wahpeton in North Dakota as well as Moorhead, Detroit Lakes, Ada and Fosston in Minnesota.
“These layoffs are almost exclusively in non-clinical areas,” said Dr. William Heegard, president of Essentia’s west region. Essentia is preserving its ability to serve patients, Heegard said, including handling a surge of patients with COVID-19, the disease caused by the coronavirus.
The layoffs follow the placement of about 850 employees on administrative leave, with benefits through July 31. Essentia executives say the intention is to call those employees back to work as needed.
A “great majority” of the 900 employees who are being laid off were among the 850 furloughed earlier, Heegard said.
Patient volumes plunged by 50% to 60% in March when Essentia suspended all routine clinic visits and procedures in response to an executive order by Minnesota Gov. Tim Walz. Essentia is gradually resuming more normal operations, but volumes remain down by about 30%, he said.
“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 CEO Dr. David Herman said in a statement.
“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,” he added.
Steps to trim costs have included placing employees on leave, using flexible hours, reducing physician and executive compensation, restructuring and eliminating management roles as well as limiting capital and discretionary spending.
Surgeries and procedures are restarting, but Essentia said it is approaching that process “carefully and slowly to protect our communities, patients and staff,” as well as to preserve protective equipment and to ensure available beds for COVID-19 patients.
Meanwhile, e-visits have risen sharply at Essentia, and now total more than 130,000 systemwide since the pandemic struck in early March. Essentia is exploring pilot projects to see how telemedicine can make health care more accessible and affordable, Heegard said.
Essentia will continue to provide health insurance for three months for non-contract employees who are being laid off. Staff covered by collective bargaining agreements have other protections, including the right to be recalled to work after layoffs.
“I recognize and deeply appreciate all our colleagues’ contributions,” Herman said. “While the COVID-19 crisis has resulted in significant shifts in society and how we care for our communities, our commitment to safe, high-quality patient care is unwavering. As painful as these actions are for all of us at Essentia, we are taking these steps to ensure Essentia is here to make a healthy difference in people’s lives, today and into the future.”
Essentia projects that it could take a year or longer for activity to return to pre-pandemic levels, although some services, such as face-to-face clinic visits, might not return to those volumes, Heegard said.
Before the coronavirus struck, Essentia’s patient volumes were increasing and its financial margins were stable.
“We were having one of our best years,” Heegard said. “We felt like we were really adding value to the community and doing well. I don’t know of one health system that is thriving in this environment. Health systems have universally been hit hard.”