Healthcare Layoffs During the COVID-19 Pandemic

Despite overcrowding of the ICUs with patients infected with coronavirus (COVID-19, SARS-CoV-2), hospitals have halted or downsized other operations. Phoenix-based Banner Health, which is Arizona's largest private employer, will impose "short-term" furloughs and pay cuts for some employees (1). Other major hospitals and hospital systems including the Mayo Clinic Arizona, Dignity Health, Tucson Medical Center and Carondelet have announced similar cost-cutting reductions. Banner Health, which has approximately 43,000 employees in Arizona, is starting the furloughs this week. The nonprofit company anticipates that the measures will affect 5% to 7% of its workforce, or up to 3,000 Arizona employees. The company says the furloughs are temporary and employees will be eligible for unemployment benefits, including an extra $600 per week provided by Arizona via the federal CARES Act. All senior leaders, including senior vice presidents, presidents, vice presidents and CEOs, will take up to a 20% reduction in pay beginning in May, Banner said. The company will pause hiring for most non-clinical, non-revenue-generating positions across the organization. This includes newly created jobs as well as vacant roles in the corporate office and facilities. The company will continue to post and recruit for positions that are essential to meet the needs of COVID-19.

An analysis by the Arizona Hospital and Healthcare Association shows Arizona hospitals are reporting revenue losses of 30% to 40% because of the cancellation of elective procedures and a reduction in emergency department visits. Hospitals had an operating margin, the difference between revenues and expenses, that averaged 2.7% in 2016 (2). The hospital association has asked Arizona’s governor, Doug Ducey, to relax his executive orders on halting elective surgeries and on expanding hospital bed capacity, citing recent modeling projections that indicate Arizona will not be as hard-hit by the disease as previously was predicted.

It is unclear how other healthcare organizations other than hospitals are managing during the COVID-19 pandemic. Our small pulmonary practice has been shut down since mid-March although we are doing some telemedicine. Yet compared to the large healthcare systems, we have managed to retain all our employees at a full-time basis as of today. Our group did apply for a small business loan to the Federal government which was denied.

Richard A. Robbins, MD

Editor, SWJPCC

References

1. Innes S. Banner Health, Arizona's largest health system, to implement pay cuts and furloughs. Arizona Republic. April 20, 2020. Available at: https://www.azcentral.com/story/money/business/health/2020/04/20/banner-health-implement-pay-cuts-and-furloughs-arizona-coronavirus-covid-19/5165992002/ (accessed 4/21/20).
2. Moody's Investors Service. Moody's: preliminary FY 2016 US NFP hospital medians edge lower on revenue, expense pressure. Moody's. 16 May 2017. https://www.moodys.com/research/Moodys-Preliminary-FY-2016-US-NFP-hospital-medians-edge-lower--PR_366813 Accessed 4/21/20.

Cite as: Robbins RA. Healthcare layoffs during the COVID-19 pandemic. Southwest J Pulm Crit Care. 2020;20(4):135-6. doi: https://doi.org/10.13175/swjpcc029-20 PDF 

Banner Hacked-3.7 Million at Risk

A large-scale computer cyberattack at Banner Health compromised the records of up to 3.7 million patients, health-insurance-plan members, food and drink customers, and doctors according to the an Arizona Republic article by Ken Alltucker (1). Banner Health discovered unusual activity on its computer servers in late June and uncovered evidence of two attacks, with hackers accessing both patient records and payment-card records of food and beverage customers. The Phoenix-based health-care provider said it will mail letters to those affected notifying them about details of the cyberattack and steps they can take to protect themselves. Banner employees, many of whom are patients and covered by Banner Health insurance plans, also are believed to be victims of the attack.

The Banner Health attack is the largest among 32 known data breaches involving Arizona-based health and medical providers since 2010 according to an U.S. Department of Health and Human Service list. The breach exceeds all other breaches in Arizona combined by over 1,000,000 affected individuals. Banner also has the dubious distinction of the previous high in Arizona when records of 55,207 were compromised in 2014 (2).

Banner Health officials said they thus far have not received reports of hackers misusing the information, but the health-care provider will offer a free one-year membership in credit-monitoring services to patients, health-plan members and others affected by the cyberattack. The hackers apparently accessed Banner computer systems that process payment-card data at food and beverage outlets at some Banner Health locations. Potential victims can view a list of affected Banner locations in Arizona, Alaska, Colorado and Wyoming at http://bannersupports.com/customers/affected-locations/. On July 13, Banner Health discovered that hackers also may have accessed patient and health-insurance records, which may have included information about doctors and health-care providers. Those records may have included names, birth dates, addresses, doctors' names, dates of service, claims information, health-insurance information and Social Security numbers.

Bob Gregg, chief executive of Portland, Ore.-based ID Experts. said health-care providers are increasingly facing attacks from criminal organizations that resell the information for profit. According to Gregg. a record containing a name, address and Social Security number sells for $1 to $3 on the black market but detailed medical records with unique patient identifying numbers can fetch up to $100 per record.

Banner Health has established a website that details information about the data breach at http://bannersupports.com. Patients or other customers who have questions or concerns about the cyberattack can call 1-855-223-4412.

References

1. Ken Alltucker. Banner Health cyberattack breaches up to 3.7 million records. Arizona Republic. August 3, 2016. Available at: http://www.azcentral.com/story/money/business/health/2016/08/03/banner-health-cyberattack-breaches-up-3-7-million-records/88035474/ (accessed 8/6/16).
2. Robbins RA. Banner prints social security numbers. Southwest J Pulm Crit Care. 2014;8(2):140-1. [CrossRef]

Cite as: Robbins RA. Banner hacked-3.7 million at risk. Southwest J Pulm Crit Care. 2016;13(2):80-1. doi: http://dx.doi.org/10.13175/swjpcc075-16 PDF 

Banner Plans to Issue New Bonds to Cover University of Arizona Medical Center Purchase

Modern Healthcare is reporting that Banner Health is issuing new bonds this week to refinance older debt (1). Banner financed the $1 billion purchase of the University of Arizona Health Network (UAHN) including the University of Arizona Medical Center with a $700 million short-term loan from investment bank Mizuho in February. Banner is issuing $100 million in tax-exempt, fixed rate Series 2015A bonds. It is also planning to take on an additional $500 million in taxable and tax-exempt debt that will be used to replace the short-term loans associated with the purchase.

Banner is focusing on how to improve the return on its UAHN investment, which has dragged down its earnings. UAHN's financial performance has deteriorated with an operating margin declining to -4.3% in fiscal 2014, down from -1.2% the previous fiscal year. Before that, UAHN was profitable, according to Banner Chief Financial Officer Dennis Dahlen. Banner reported an operating surplus of $107.6 million on $3.4 billion in revenue for the first half of this year (2). In the prior-year period, its operating surplus was $186 million on $2.7 billion in revenue.

In an attempt to increase profitability, Banner has implemented a leadership incentive plan at UAHN and labor productivity tools. The executive compensation firm Sullivan Cotter has also been hired to design a new physician practice compensation structure. Dahlen noted that Banner believes that it will stabilize UAHN's finances by the end of next year, with profitability returning in 2017.

With the purchase of UAHN and the much smaller 44-bed Payson Regional Medical Center in July, Banner now reaches 82% of Arizona residents and is by far Arizona's largest health care system. Banner also plans to expand UAHN's health plans statewide to capture additional market share. The impact the debt from Banner's drive for market share will have on health care prices and Banner employees is unclear.

Richard A. Robbins, MD

Editor

Southwest Journal of Pulmonary and Critical Care

References

1. Kutscher B. Banner prepares to issue new debt amid UAHN turnaround efforts. Modern Healthcare. October 20, 2015. Available at: http://www.modernhealthcare.com/article/20151020/NEWS/151019914?utm_source=modernhealthcare&utm_medium=email&utm_content=20151020-NEWS-151019914&utm_campaign=am (accessed 10/21/15).
2. Kutscher B. Banner aims to cut costs from UAHN as earnings lag. Modern Healthcare. August 25, 2015. Available at: http://www.modernhealthcare.com/article/20150825/NEWS/150829923 (accessed 10/21/15).

Cite as: Robbins RA. Banner plans to issue new bonds to cover university of Arizona medical center purchase. Southwest J Pulm Crit Care. 2015;11(4):191. doi: http://dx.doi.org/10.13175/swjpcc136-15 PDF

Banner Health, University of Arizona Health Network to Merge

On Thursday, June 26, the Arizona Board of Regents and the University of Arizona Health Network (UAHN) Board unanimously gave the go ahead to formal negotiations with Banner Health. Under the proposed agreement Banner will acquire the University of Arizona Medical Center and its south campus, which have 624 beds between them, UAHN's faculty practice, University Physicians Healthcare and the system's three health plans. Initial terms of the agreement stipulate that Banner will spend at least $500 million toward capital projects in the next five years, and it will pay $300 million to establish an academic endowment (1). UAHN’s long-term debt, totaling about $146 million, will be absorbed by Banner. UAHN and Banner said plan on reaching a definitive agreement by September.

UA President Ann Weaver Hart was quoted by Tucson News Now as saying, "These 30 years which this agreement anticipates are going to be among the most transformational in health care in America experienced in the last century. And we're absolutely committed to be the leaders in that environment. This is extremely exciting. And I hope you can feel our commitment. We are going to make the future. We are not going to be recipients of the future made by others" (2). We have a solution to expand our capabilities to move care to a higher level, to advance research for our community and our state and to educate the future health care professionals for the state of Arizona," said UAHN President and CEO Dr. Michael Waldrum.

Under the agreement Banner will commit to the "employment of the employees of UAHN and its subsidiaries for at least six months after closing at their current base salaries and retention of their seniority for employee benefits purposes. " (1). The proposal also includes a severance package for any employees who are laid off after that six-month period.

Banner owns 25 hospitals in seven states. In total, the proposed transaction is expected to generate about $1 billion in new capital, academic investments and other consideration and value beneficial to UA and the community, a news release said. The resulting organization will employ more than 37,000 people, after adding 6,300 employees at UAHN's two hospitals, the health plan and the medical group.

The Arizona Cancer Center is excluded under the proposed agreement and will remain part of the University of Arizona. The proposal does not affect Banner's existing agreement with the Banner MD Anderson Cancer Center at Gateway Medical Center in Gilbert nor does it affect UAHN's agreement with St Joseph Medical Center in Phoenix.

This would be Banner's first acquisition on an academic medical center which reflects the growing relationship between academia and corporate America (3). Balancing the teaching and research goals of academia and the profit goals of corporations whether profit or not-for profit can be difficult. Some physicians have been troubled by Banner's non-compete clauses on physician contracts as well as Banner's aggressiveness in employing physicians that directly compete with private practice physicians at their hospitals. It is unclear how this agreement might conflict with the academic goals of UAHN as well as affecting the relationship with physicians currently practicing at Banner.

Richard A. Robbins, MD

Editor

References

1. Arizona Board of Regents agenda. Available at: http://azregents.asu.edu/boardbook/Board%20Agenda%20Books/2014-06-26%20Board%20book.pdf (accessed 6/27/14).
2. Ames J, Grijalva B. UA Health Network, UA move forward in negotiations with Banner. Tucson News Now. June 26, 2014. Available at: http://www.tucsonnewsnow.com/story/25880624/ua-health-network-ua-to-move-forward-in-negotiations-with-banner (accessed 6/27/14).
3. Reece EA, Chrencik RA, Miller ED. Fully aligned academic health centers: a model for 21st-century job creation and sustainable economic growth. Acad Med. 2012;87(7):982-7. [CrossRef] [PubMed] 

Reference as: Robbins RA. Banner health, University of Arizona health network to merge. Southwest J Pulm Crit Care. 2014;8(6):358-9. doi: http://dx.doi.org/10.13175/swjpcc085-14 PDF