Duluth-based Essentia Health, the port city’s largest employer, is putting 500 staffers on unpaid leave. The affected employees are all non-medical staff who are not directly involved in caring for patients.
Essentia released a statement on Monday which characterized the layoffs as a “special administrative leave.” The statement added that “staffing levels will continually be evaluated and adjusted as needs evolve.”
In the days of Covid-19, why is a health care system cutting staff? In short, moves taken to prepare for an expected surge in coronavirus cases have cut into Essentia’s revenue. For instance, Essentia has postponed elective surgeries and procedures. It has also closed some clinics and postponed routine appointments.
Per its statement: “Essentia Health has not been immune to the impact on our business operations as we comply with directives from state and federal health officials, which have led to a severe disruption in services. Like other health care organizations around the country, we are projecting a 20-40% decrease in revenue due to pandemic-related declines in patient volumes.”
Essentia will maintain health insurance for affected employees “for the near term.” The employees can also file unemployment insurance applications. The state is currently being deluged with a record number of unemployment claims.
Essentia Health is a nonprofit. For its fiscal year ending June 30, 2019, Essentia reported revenue of $2.17 billion and expenses of $2.11 billion. A filing with the city of Duluth indicated that Essentia employed approximately 6,500 people in Duluth in 2018.
Essentia Health employs 14,500 in its system which includes 15 hospitals and 69 clinics. Essentia has hospitals in Brainerd, Detroit Lakes, Sandstone, and Virginia as well as Fargo, North Dakota, and Superior, Wisconsin.
Essentia Health is building the $800 million Vision Northland project, which Essentia touts as “the largest private investment in Duluth’s history.” The project will remake and consolidate Essentia’s campus in downtown Duluth with a new St. Mary’s medical center. Vision Northland is set for completion in the winter of 2022-2023.