Above: Alan Levine, Ballad Health Chairman and CEO
By Scott Robertson
Ballad Health will begin implementing furloughs Friday for around 1,300 employees, Chairman and CEO Alan Levine said Wednesday. Levine said the system had considered several models regarding crisis staffing levels and had chosen to furlough some workers so those workers could collect the extra unemployment benefits offered through the CARES Act.
“If you make a gross salary of $45,500 a year in Tennessee or 50,856 dollars a year in Virginia, it is likely because of what Congress did that you will benefit more by not being on our payroll during this period of time and taking advantage of the federal stimulus bill that was provided for a very explicit reason,” Levine said. “It was provided to help team members who have faced reduced hours and was provided to help employers who are absorbing the cost of sustaining a labor force even when (we) faced a massive loss in (our) business.”
Other health systems around the country are paying workers 50 or 75 percent of their salaries to stay home, but those workers are not eligible for CARES Act unemployment benefits. What Ballad is doing allows most workers to collect 100 percent of their wages, Levine said. Ballad will contribute $275 a week to Tennessee-based employees through the plan and $386 a week to Virginia-based employees, in addition to the $600 a week provided by Congress through the CARES Act.
“That’s pure economic effect on our region,” Levine said. “That’s $600 a week for each of these team members that is coming into the region that they can spend. If they were sitting at home and we were cutting their paid by 25 percent or 50 percent, that’s money that’s coming out of the economy.”
Furloughed Ballad employees will continue to receive full health benefits and full pharmacy benefits from the company. “Ballad Health is also waiving their out-of-pocket portion of their premiums,” Levine said.
Front-line employees who are most likely to be called in during a potential coronavirus surge including registered nurses, licensed practical nurses, respiratory therapists and certified nurse assistants will receive full pay from Ballad whether they have been called off or not. “We are guaranteeing whatever hours you are in our system for. If you’re full time, we’re guaranteeing you full-time hours,” Levine said. “If you’re part-time, we’re guaranteeing you those part-time hours. Even if you’re called off, we’re going to guarantee you those hours now.”
At such time as the crisis ends, Levine said the hope is to bring all furloughed employees back, on a timeline based on the rise in patient volumes. “You can be recalled that anytime,” Levine said of furloughed workers. “The expectation is that you will return when you are called back in. I understand that for a lot of these team members, they will make more money on unemployment benefits than they made working because of the enhanced benefit provided by the federal government. That should not be an incentive not to come back to work when you’re called.” Furloughed employees who do not return when called back in will be considered by the company to have voluntarily resigned.
Non-furloughed employees will also be affected by the temporary changes being made in the company’s compensation structure. “All of our senior vice president and above positions within Ballad are going to take a 20 percent reduction in pay,” Levine said. “We’re going to do that for 60 days. We’ll reevaluate it in 60 days.
“Anybody who’s in an assistant vice president or vice president category will be will have their base pay reduced by 10 percent during this time period. So, everyone that’s in a senior management role is taking a pay reduction and as I’ve previously announced I’m foregoing 100 percent of my pay during that same 60-day period.”
In addition, the medical group management has opted to impose a 20 percent cut for every physician and advanced practice provider.
Beyond human resources, Levine said Ballad is imposing several austerity measures to cut costs. Because Tennessee and Virginia have granted force majeure status to the Coronavirus crisis, COPA spending will be suspended, as will all capital spending not specifically approved by the CEO’s office.
“Any spending on outside consultants is suspended,” Levine continue. “We’re adjusting our par level of our supply inventory to reduce our supply costs which obviously is logical. We are suspending retirement contributions for this current fiscal year. We are also suspending accruals for paid time off for department managers and above that goes all the way up to me.”
Levine scoffed at armchair critics of Ballad’s practices, saying, “folks who want to make comments that are careless or not educated – they have the luxury of not being responsible for these assets. My team is, our board is, responsible for these assets and it’s not all milk and honey. You don’t get to just be there when things are all really good. Sometimes you have to make hard decisions.
“Right now, we’re projecting over 90-day period to face up to $155 million loss. If we lose $155 million, we won’t recover those dollars in cash unless the federal government comes up with a plan to restore those dollars. To some degree they are. There has been some relief in the stimulus bill, but it doesn’t replace those dollars dollar for dollar.”
Just how much assistance the company will receive through the CARES Act is still very much in question, Levine said. “There are several different buckets that we’re provided in the in the CARES Act – three or four in particular that we’re looking at. One is obviously the direct payment to hospitals due to lost volume. We don’t know how that’s going to be distributed.
“If the federal government uses Medicare fee-for-service as the mechanism for determining how those dollars are going to be distributed, systems like ours are going to be disadvantaged because in some of our counties 60 to 70 percent of the Medicare population receives their Medicare benefit through United or Humana one of those insurance companies.”
The second bucket is Medicare Advanced Payment, essentially a low-interest loan. It will be most helpful to rural and small hospitals with cash flow problems, Levine said. “We’ve lost almost 200 million in cash already just from what happened in the market then you add the operating losses above to 155 million and that’s a pretty big cash hit.
“That pot of money is not new money. That’s money we’re borrowing against ourselves. The way that’s going to work is, we get that cash infusion now and in 120 days as we bill Medicare, Medicare will withhold our payments. So, we get that cash now and then over a period of time we’re going to get paid nothing by Medicare as we repay those dollars.”
“One of the biggest buckets of support for hospitals is the unemployment enhancement,” Levine continued, “because the enhanced unemployment benefit is the fastest way to get the money to consumers and to get the money to the marketplace. When we enroll these people in the unemployment benefit, they’re going to start getting checks immediately and those checks can circulate into the economy.”
Making full use of that package, Levine said, is a big part of what’s setting Ballad apart from most of its peer companies. “I do not know another health system that is doing that we are – guaranteeing full pay to more employees than the largest for-profit health system in the United States or any other not-for-profit system that I’m aware of. I’m proud of that.”