KALAMAZOO, MI -- Due to rising costs of COVID-19 care, Bronson Healthcare system announced executive level pay cuts and non-clinical employee furloughs.
Preparations and purchases related to COVID-19 have significantly increased the healthcare system’s expenditures, according to a press release.
At the same time, the health system is experiencing losses in revenue due to the suspension of elective surgeries and procedures, temporary closings of some services, as well as reduced diagnostic tests, office visits and emergency department visits as patients remain at home, according to the releases.
Elective surgeries stopped on March 18. In an interview with MLive, Bronson Healthcare CEO and President Bill Manns said March’s revenue was down 50% compared to the last year’s revenue.
Bronson is pursuing opportunities for financial reimbursement and grants, including FEMA reimbursement, CARES Act relief grants and other state and federal relief opportunities, according to the release.
However, the healthcare system cannot rely on the unpredictable timing of the reimbursements, according to the release.
To solve the immediate losses Bronson Healthcare announced its new CEO and President Bill Manns will take a 25% salary reduction. Bronson Healthcare did not respond to MLive requests for Manns’ salary.
Manns started at Bronson on March 30 after both Kalamazoo and Calhoun County had positive coronavirus cases reaching the double digits.
Additional wage reductions were announced at the executive level at decreasing percentages proportionate to salary levels. These reductions will last through August 15, according to the release.
Bronson Medical Group providers will also participate in a salary reduction.
The combined savings from the CEO, executive and leader salary reductions comes out to more than $1 million. The pay cut from the providers’ salary reductions is about $3.7 million, according to a Bronson spokesperson.
In a statement, Manns said the healthcare system is starting to ramp up surgeries and other procedures with the goal of being fully operational by September.
Other practices plan to be back to regular operations by August, he said.
“If we can do it sooner, we will.” Manns said. "However, the availability of enough PPE to ensure the safety of our staff and patients in all settings continues to be a limiting factor.”
Related: Number of coronavirus cases in Kalamazoo County double in one week
The healthcare system cited predictive models that indicate southwest Michigan’s COVID-19 spread may continue into the fall rather than an overwhelming surge this spring, assuming responsible social distancing continues after the stay-at-home order expires.
Across all Bronson hospitals, there are 33 current COVID-19 patients and 39 recoveries as of April 21. There have been 11 deaths related to COVID-19 at Bronson hospitals, according to Bronson data.
Due to the work slowdown for non-clinical employees, furloughs will be implemented over the next few weeks for several hundred employees. The furloughs are expected to be for 16 weeks, however, some employees may be called back sooner as their areas ramp back up, according to the release.
Core contributions to employee retirement accounts and 403b/401k matches are suspended for the remainder of the year. Employees can still make personal contributions.
Bronson continues to proceed with major projects in development including seven offices for Bronson Primary Care Partners which will open on July 1, the new lab at Bronson Methodist Hospital opening in late July, and the Bronson Cancer Pavilion in Kalamazoo and new Bronson South Haven Hospital which are both slated to open in early 2021, according to the release.
Bronson’s announcement comes hours after Beaumont Health announced it is temporarily laying off 2,475 employees, most of whom are administrative staff and others not directly caring for patients with or without COVID-19.
Beaumont Health CEO John Fox will take a 70% temporary pay cut to his base salary, and the other members of the executive leadership team will take pay cuts of up to 45 percent of their total compensation.
Ascension Michigan, which has hospitals on both sides of the state, did not immediately respond to a request for comment on its financial plan.
More coronavirus coverage on MLive:
60 coronavirus cases, 1 death at Plainwell meat plant
Man, 49, dies of coronavirus while wife ‘fighting for her life’ across the hall
After 9 days on ventilator, patient discharged in Kalamazoo to applause from staff
21 people diagnosed with coronavirus in Kalamazoo County facilities with vulnerable populations
‘Several’ residents, employees test positive for coronavirus at Berrien County nursing home