Emory Healthcare to cut hours, furlough up to 1,500 employees as it faces $660M shortfall due to pandemic

By Dyana Bagby  – Reporter, Atlanta Business Chronicle, Atlanta Business Chronicle

Emory Healthcare, the largest healthcare system in the state, announced May 21 it would be cutting hours and furloughing up to 1,500 employees as it faces a $660 million revenue shortfall due to the Covid-19 pandemic. The news follows Wellstar Health System’s announcement on May 20 it was forced to furlough more than 1,000 employees as it faces up to $600 million in losses also brought on by the pandemic.

Jonathan S. Lewin, president and CEO of the nonprofit system, said in a written statement that Emory Healthcare expects a $660 million revenue shortfall based on projections through August. The shortfall impacts 11 hospitals and outpatient practices. The reduced hours and furloughs are slated to go into effect June 1 and continue through Aug. 31.

The magnitude in loss in revenue is attributed to cancellation and postponement of the majority of surgery, procedural and diagnostic cases that “far exceeds the $142 million in federal grant receipts,” or CARES Act funding, that Emory Healthcare has received, he said. Congress approved the $175 billion CARES Act to provide relief funds to hospitals and other healthcare providers to cover healthcare-related expenses or lost revenue attributable to Covid-19.

“While never more proud of our team’s response, Covid-19 has had a significant negative impact on our normal revenue and operating expenses, which we must address to ensure a sustained financial recovery throughout our extensive health care system to continue our care and academic missions,” Lewin said.

“The U.S. Department of Health & Human Services grants are much appreciated, but like any business, we must right-size our expense base to address the loss of revenue by matching our expense trends to our revenue trends – both in the short and long term,” Lewin said.

Beginning June 1, Emory Healthcare is implementing measures to mitigate the financial losses:

  • Executive and senior management will receive a scaled aggregate FY20 compensation reduction of up to 25 percent.
  • Departments throughout Emory Healthcare will reduce labor expenses by at least 10% through the end of this fiscal year.
  • Staffing will be balanced to patient demand and supporting administrative work through a combination of flexible scheduling and short-term furloughs. Health care benefits will remain in place during any furlough situation for our team members

“We anticipate this combination of flexible scheduling and short-term furloughs to impact up to 1,500 full time equivalent positions throughout the system from June 1 to Aug. 31,” Lewin said.

The reduced work hours and furloughs will be spread across the system’s nearly 25,000 employees throughout the entire system and will depend upon patient admissions through the summer. These changes will be reassessed continuously throughout that period, Lewin said.

“We are entering a new phase in which we are making difficult decisions. We will continue to communicate openly with our Emory Healthcare team to ensure transparency as we move toward a new future of continuing to improve lives and provide hope,” Lewin said.

Correction: This story has been updated to correct that Emory Healthcare is reducing hours as well as furloughing employees.