Providence Health & Services, the $5.2 billion-a-year behemoth of Oregon health care, plans sweeping pay cuts and other cost-cutting moves that will hit doctors and other health care employees.
At least 1,800 Providence employees will be impacted by the reductions. Compensation reductions will range from 5% to 50%.
About 1,200 employees got the word late Monday that they were among those caught up in the expense reduction plans, Providence confirmed Monday evening. That’s on top of 600 other employees who got hit with mandatory furloughs or other pay reductions in May.
The more than 600 employees of the Providence Medical Group, most of them physicians, will have their compensation reduced by 10% to 17%. Physician assistants, occupational and physical therapists and others also will be subject to the cuts.
Providence officials said the pay cuts will last only through a single quarter of this year. Earlier memos suggested that the reductions could extend longer if Providence’s financial results didn’t improve. But the nonprofit confirmed Monday that salaries will be restored after three months.
Virtually every hospital and health system in the state has taken steps to rein in costs since the virus hit in March.
It was just weeks ago that healthcare workers were being widely celebrated as heroes who risked their own health to treat victims of the COVID-19 pandemic. But today, with the first wave of the novel coronavirus on the wane, hospitals and health systems claim they must take decisive action because the killer virus has put them into critical condition financially.
In other words, last month’s toast of the town is now just toast.
Some hospitals are going for more than just a temporary expense reduction. Salem Health, operator of that city’s main hospital, hopes the lessons of the pandemic will help it fundamentally change its business model.
“It became obvious that the manner in which we delivered care before COVID-19 is no longer sustainable,” managers at Salem Health said in a May 29 memo to employees. The hospital is in the process of developing a new “staffing model” that “provides both excellent care and financial sustainability through a combination of lean efficiencies, centralization and restructured teams.”
Salem Health officials said it is restructuring only its network of primary care clinics.
Doctors and other health care providers said it’s not fair for their employers to cut their compensation in the middle of a dangerous pandemic.
Dr. Chris Strear, an emergency room physician at Legacy Emanuel Medical Center, said doctors understand the financial realities. “We get it, if there’s no money there’s no money,” said Strear, president elect of the Oregon chapter of the American College of Emergency Physicians. “At the same time, it’s sort of a bitter pill to swallow. We’re out there taking these risks every day. You worry about the pandemic, about the virus, about PPE, and then on top of that you have to worry about your paycheck and your livelihood.”
More than 600 health care providers in Oregon have contracted the coronavirus.
Legacy Health, owner of Emanuel, imposed its own compensation reductions and other cost-cutting measures last month.
Providence doctors reached by The Oregonian/OregonLive declined to speak on the record about the pending pay cuts. Their employer takes a hard line on discussing corporate information.
“As we all go through tough times, it is hard not to express yourself on social media sites,” Providence said in one of the memos to employees. “It's important for Workforce Members to remember that individuals can be held personally and legally responsible for their publicly made opinions and comments, even on personally maintained sites and pages.”
Dr. John Santa, a retired physician and member of the Oregon Health Policy Board, said it’s not unreasonable to ask relatively well-paid doctors to share the pain of expense cuts. Physicians at the Providence Medical Group, one of the primary targets of the cost-cutting, can earn $200,000 to $900,000 a year.
Doctors argue that they’ve earned their pay after four years of college, four years of medical school and typically three to seven years of residency and specialty training. Many accumulated hundreds of thousands of dollars’ worth of college debt as well.
The Providence doctors say privately that given their employer’s enormous financial resources, it shouldn’t need to lean on employees to stay afloat. Providence’s Oregon operation alone listed $4.7 billion in total assets at the end of 2019. More than $806 million of it was in cash and cash equivalents.
One Providence physician explained the logic in going to work for Providence in the first place:
“In doing that, I give up quite a bit of freedom,” this person said. “My practice is run by the hospital.”
While that structure may limit doctors’ upside, it also protects them in case of a disaster.
“It’s the hospital, rather than me, that has to worry about building up a rainy day fund,” that doctor said. “And this is that rainy day.”
But Providence argues its spring quarter was so bad, it does need to spread the pain.
Providence’s parent operation, which operates hospitals from Alaska to west Texas, suffered $276 million in operating losses in its first quarter. But COVID-19 was just beginning to have an impact toward the end of the quarter. In April alone, the parent organization lost another $179 million, according to a Providence internal memo.
Those losses were driven by the suspension of elective surgeries, which all hospitals implemented in order to concentrate on COVID-19 cases. That step cost Providence $503 million.
Santa, the retired doctor, said health systems must protect their primary care operations, particularly the clinics in rural areas that serve vulnerable populations. The huge racial disparity in COVID-19 outcomes has vividly illustrated the need for more and better care for the poor and people of color, he said.
The Providence Medical Group operates clinics in Hood River, the North Coast and elsewhere in the state. Salem Health operates several clinics in Salem and more rural parts of Marion County. That network of clinics is precisely what Salem Health is now restructuring.
Salem Health confirmed late Monday that it will close two of them, one in Salem one in Independence. It will also limit service and reduce staff at some of the others.
Salem Health is emphasizing a move to so-called tele-health and other means of virtual health care.
“Providing more care in a virtual setting means less physical space is necessary,” the internal memo states. “In order to adjust to this new reality, some clinics will close.”
The memo goes on to say that the restructuring will include some “leadership changes, a reduction in the number of supervisors and the reclassification of some managers into different roles.” One employee said they are being required to reapply for their current positions. Salem Health confirmed Monday evening that about 20 employees will “not secure their jobs within the department.”
Jeff Manning
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