It might come as a surprise to many that amid the public health emergency caused by COVID-19, health care workers are being hit hard with layoffs, furloughs and reduced hours. But that is in fact the case, as medical associations and public health agencies direct health care providers to cancel or postpone elective surgeries, primary care appointments, and other forms of non-urgent health care in order to preserve hospital workers’ personal protective equipment, ensure providers have adequate bandwidth to respond to the pandemic, and limit the spread of COVID-19 infection. As a result, hospital employees and other health care providers including dentists, ophthalmologists, surgical technicians, physical therapists, nurses, in-home care providers and office support staff are feeling the effects of a massive slow-down in one of Montana’s largest industries.
Last month, 3,345 workers in the health care and social assistance industries filed new unemployment claims with the Montana Department of Labor and Industry, which represents 5% of the industry’s total statewide workforce and a 1,157% increase over the number of industry claims filed in March 2019. Just two economic sectors — accommodation and food service (9,883 claims), and construction (4,048 claims) — logged higher volumes of new claims.
Such a staggering workforce reduction is having a profound impact in Montana. Approximately 20% percent of the state’s total personal income and 17% of its employment are sourced to the health care industry, according to economist Robert Sonora, who directs health care research at the University of Montana’s Bureau of Business and Economic Research.
Sonora said health care is labor-intensive — and therefore an important job engine — and a significant contributor to Montana’s economic base, meaning many of the dollars spent on health care come from outside of the state (Medicare payments made to hospitals by the federal government, for example).
COVID-19 has seriously destabilized that base. By the Montana Hospital Association’s estimation, Montana’s GDP is being reduced by $96 million per week due to reduced use of hospital services. Those service reductions translate to substantial revenue losses, and many hospitals are watching their reserves dwindle as a result. Now they’re making difficult calculations about how to make payroll and cover other expenses.
On April 13, Kalispell Regional Healthcare, which employs more than 4,000 people across a 13-county area of Montana, announced that it is furloughing roughly 600 employees. Without the furlough, the company projects it would lose more than $16 million in revenue per month. The move was prompted by “the compounding effect of the loss of patient volumes, cancellation of elective surgeries, and the closure of entire service lines,” CEO Craig Lambrecht wrote.
“Effective immediately KRH executives, physicians and executive directors will be taking reductions to their salaries. In addition, KRH will begin the necessary process of furloughing and reducing hours/shifts for certain employees. The furlough will impact about 600 employees,” the release said, without specifying which employees would be furloughed, or given mandatory suspensions from work without pay.
Kalispell Regional Healthcare is one of more than 100 hospitals across the country that have furloughed staff since late March, according to information compiled by Becker’s Hospital Review. It is the only Montana hospital named in the report.
Billings Clinic, which operates a 304-bed hospital in Billings and has relationships with critical access hospitals and clinics throughout the state, has committed to keeping its employees on payroll, chief human resources officer Jonathan McDermott said April 10. He said elective surgeries and clinic visits account for most of the company’s revenue, and with those income streams weakened, Billings Clinics’ revenues are “significantly down.”
In order to continue paying employees, Billings Clinic has reduced some workers’ hours and shuffled employees whose positions or skills are currently in lesser demand into different roles. For example, some staffers are screening potential COVID-19 patients when they enter the hospital, a number of employees are working at an ad-hoc daycare set up by Billings Clinic at the Billings Public Library to meet essential health care workers’ childcare needs, and others are sewing face masks and surgical gowns. McDermott praised employees’ flexibility as they’ve adapted to the new roles.
“Most [of our employees] tell us that they’re very happy to have the opportunity to continue to work, even if it is in a different capacity,” he said. “It’s not lost on them that some of their neighbors [and family members] aren’t working right now.”
In Glasgow, Frances Mahon Deaconess Hospital CEO Randall Holom said he’s managed to keep his approximately 250 employees on payroll despite the “fairly significant” hit to his company’s bottom line he expects to see when he reviews forthcoming financial statements.
Holom said his team is looking at funding options through the federal Coronavirus Aid, Relief, and Economic Security (CARES) Act, as well as support from state and local financial institutions. In the short term, Holom reports that Frances Mahon Deaconess has enough reserves to continue paying employees who’ve been sent home, but he said he worries about other rural Montana hospitals that are in more marginal financial positions.
Holom cited the 2020 Rural Hospital Sustainability Index, a study that found that Montana has seven rural hospitals at “high financial risk.” Collectively, those hospitals employ more than 650 people and account for more than $107 million in annual revenue, according to consultancy services firm Guidehouse. All are classified by Guidehouse as “highly essential” due to their geographic isolation, service to vulnerable populations and impact on local employment dynamics.
The ability of rural hospitals to survive the COVID-19 pandemic has also been on lawmakers’ radar. Last week, Sen. Jon Tester sent a letter to U.S. Department of Health and Human Services Secretary Alex Azar urging him to ensure that the $100 billion set aside in the CARES Act for public, for-profit and nonprofit health care providers doesn’t discount rural hospitals’ needs. Many “already financially fragile hospitals face catastrophic cash shortages,” Tester wrote. “Tens of thousands of rural [Americans] will lose access to their nearest emergency room [without intervention].”
Hospitals aren’t the only health care providers facing bleak financial outlooks and difficult decisions. COVID-19-related service reductions have also dealt a swift blow to dentists, optometrists, physical therapists, and other outpatient care providers who fall under the “ambulatory care services” grouping.
State unemployment numbers don’t break out claims by specific occupations, but the U.S. Bureau of Labor Statistics found that ambulatory care services — a category encompassing physicians’ offices, dentistry practices, outpatient care centers, home health care, medical and diagnostic laboratories and other health care services — is the segment of the health care and social assistance industry that suffered the greatest job losses last month. These providers’ payrolls fell a whopping 41% across the country since the first of March.
Missoula Bone & Joint, a 15-physician orthopedic practice with a surgery center, urgent care clinic and on-site physical therapy, has seen a dramatic slowdown to its business that’s led to a 25% workforce reduction. Physicians are no longer performing elective procedures at the outpatient surgery center that opened just last December. CEO Sami Spencer said that since elective surgeries account for about 90% of patients, the financial losses are significant. The clinic also has experienced a drop in business of about 60%, she said.
Spencer said that since March 23, more than 50 of the business’ 200-plus employees have been laid off, and the rest are working reduced hours. Employees that have been laid off include physician assistants, nurses, surgical technicians, athletic trainers, patient transporters and front desk staff.
She said Missoula Bone & Joint workers who filed for partial unemployment benefits have reported receiving checks. Those who are seeking the full benefits were still waiting, last she’d heard. (The volume of claims is “unprecedented,” according to a press release from the Montana Department of Labor and Industry. More than 41,000 requests for payment were submitted to the unemployment office in a two-day period last week. The agency has trained or reassigned more than 100 employees to facilitate claims processing.)
Some businesses that are able to maintain their payrolls are doing so with the help of federal funding that’s been made available by recent federal legislation.
“As we move through the peak of COVID-19 in Montana, we anticipate many of these health care and social assistance employees will be brought back.”—Mike Peery, Montana Department of Labor and Industry
Peter Schmieding, a dentist who treats patients at two rural clinics in south-central Montana, dropped off his application for the Paycheck Protection Program on the first day applications were accepted. He gave it to a banker he’s known for years — a smart move, given that the program is in high demand, with varying levels of cooperation from eligible banks. The program, which was created by the CARES Act and is run by the U.S. Small Business Association, will help him keep his hygienist on payroll even though she’s not currently working. It will also help cover some of his revenue loss.
Schmieding, who’s been a dentist for 39 years, said he considers himself lucky compared to other business owners: his overhead is low, he owns his facilities outright, and he has just two employees to support. He knows that’s not the case for many dentistry practices.
He isn’t seeing as many patients as he did before COVID-19 — some days he’ll treat four or five, and other days he won’t see any, he said — but he’s still available to treat urgent needs like an abscess or a tooth extraction.
“I feel l need to do my part,” Schmieding said. “A lot of the emergencies we see would [otherwise] end up in the ER.”
He’s treating these patients at considerable personal risk. “If I’m working 10 inches away from a [patient’s] mouth, then [I’m] probably more at risk than a physician,” he said.
Schmieding has been staying away from his residence in Bozeman so he won’t unwittingly bring COVID-19 home to his wife, whose immune system has been weakened by radiation and other forms of cancer treatment. As of April 10, he said, he’d been sleeping at his clinic in Ennis for a couple of weeks rather than driving home after work.
Although his family is looking at expenses that can be trimmed, he doesn’t anticipate being financially strapped indefinitely. He said he thinks demand for his services will pick back up once COVID-19 starts receding.
Mike Peery, a director of labor market information with the state, echoes that optimism. He wrote in an email to Montana Free Press that he anticipates many lost and furloughed jobs will return.
“As demand for [smaller specialty health care provider workers] change, and as we move through the peak of COVID-19 in Montana, we anticipate many of these health care and social assistance employees will be brought back,” he said. He added that the Department of Labor has noted a recent increase in job postings for personal and home care aides, medical health services managers, nurses, home health aides and social workers.
Kalispell Regional Healthcare CEO Lambrecht indicated that he, too, believes his business will recover.
“I am confident that we will ramp back up quickly once it is safe to do so,” he said.