Mercy begins furloughs, layoffs May 11; will operate at a deficit in 2020

Missouri-based Mercy Health System, which operates hospitals and clinics in multiple Arkansas cities, will begin furloughing employees across its four-state footprint next week. The furloughs are expected to last through July.

The exact number of people impacted was not given, but Mercy Health System CEO Lynn Britton noted on the company website “thousands of co-workers across the network of hospitals and ministries will have their hours reduced through July.”

Britton said the decision was difficult to make as it also includes frontline caregivers. He said health insurance will be provided through the furlough period, and those who have exhausted their time off will receive an additional 80 hours of pay made available from donations of PTO from across the Mercy network.

“In addition to furloughs, these extraordinary circumstances require the elimination of positions at every level of the organization, impacting every department and every community across the ministry. Rest assured we will do all we can to cushion this heavy blow, including severance to help care for co-workers and their families,” Britton said.

Those who remain in their jobs will also take pay-cuts up to 26% this year, compared to earnings last year. He said the most significant reductions are at the senior level. There will be no 401k/403b matches made for calendar 2020 and annual merit increases will be delayed. Mercy has also suspended hiring for open positions.

Britton said 2020 has already proven to be a year unlike any other in his lifetime. He said like most healthcare systems, Mercy delayed or canceled many of its services to better prepare for treating coronavirus patients and to limit risks for patients and employees.

“The shutdown left tens of thousands of Mercy patients waiting for important screenings, procedures and surgeries. While necessary, these actions resulted in heavy financial losses for March and April. Even as we move quickly to restart services, we will continue to operate at a significant deficit throughout this calendar year and almost certainly the next,” Britton said.

Gov. Asa Hutchinson on Friday announced that overnight (48 hour) elective medical procedures can begin May 11. Outpatient elective procedures began April 27. He said the expansion of medical services should help the financial conditions of hospitals and clinics, and may allow Mercy to bring back workers sooner.

“(A)s the elective surgeries are increasing, we would hope these health care workers would be brought back into work very quickly, that the demand is there, that they’ll be able to return to work and will be doing more business as usual in the coming weeks. So hopefully, any layoffs will be very short-term in length,” he said.

Britton said given the uncertainty, Mercy cannot know or predict when this crisis will be over.

“But we do know this: we must make painful adjustments to protect the ministry’s viability and keep our financial foundation sound,” Britton said.

Britton said the global pandemic and its unprecedented demands on Mercy’s health system will likely go on another 12-18 months. He said knowing this, Mercy will be driving several significant operational changes in the months ahead, including a ‘command center’ structure that will keep us moving rapidly to meet these new challenges. And other changes are coming – from permanently adding video visits with Mercy physicians to reassessing the amount of clinic and commercial office space we ultimately need.

He said those employees who remain with Mercy will have their work cut out for them.

Each of us must maintain the energy and focus required to support our patients, our ministry and one another in the weeks and months ahead. It will not be easy, but it will be our own unique opportunity to make a lasting contribution to a ministry that has already weathered long wars, deadly pandemics and nearly two centuries of change.

The deep financial challenges come on the heels of Mercy’s $277 million expansion plan in Northwest Arkansas from 2016 through 2019. It was highlighted by the opening of the $133 million hospital expansion in Rogers. The multiple-year expansion added 1,000 healthcare jobs to the region, some of which will now be lost.

In a recent interview on Talk Business & Politics with Roby Brock, Mercy Hospital Northwest Arkansas CEO Eric Pianalto discussed some of the challenges the provider is facing amid the coronavirus pandemic.

Mercy Hospital Fort Smith (1,722) and Mercy Hospital Northwest Arkansas (1,270) employ nearly 3,000 workers, according to the Northwest Arkansas Business Journal’s annual list of Largest Hospitals/Health Systems, published this past November.