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Labor Secretary Eugene Scalia faces blowback as he curtails scope of worker relief in unemployment crisis
Labor Department comes under fire over handling of worker protection, unemployment program.
In recent days, Labor Secretary Eugene Scalia, who has expressed concerns about unemployment insurance being too generous, has used his department’s authority over new laws enacted by Congress to limit who qualifies for joblessness assistance and to make it easier for small businesses not to pay family leave benefits. The new rules make it more difficult for gig workers such as Uber and Lyft drivers to get benefits, while making it easier for some companies to avoid paying their workers coronavirus-related sick and family leave.
“The Labor Department chose the narrowest possible definition of who qualifies for pandemic unemployment assistance,” said Andrew Stettner, a senior fellow at the Century Foundation who has spent two decades working on unemployment programs.
At the same time, frustrations have built among career staff at the Labor Department that the agency hasn’t ordered employers to follow safeguards, including the wearing of masks, recommended by the Centers for Disease Control and Prevention to protect workers. Two draft guidance documents written by officials at the Occupational Safety and Health Administration, part of the Labor Department, to strengthen protections for health-care workers have also not been advanced, according to two people with knowledge of the regulations granted anonymity to discuss the internal deliberations.
Scalia, a longtime corporate lawyer who is the son of the late Supreme Court justice Antonin Scalia, has emerged as a critical player in the government’s economic response to the pandemic. Nearly 17 million Americans have applied for unemployment insurance since President Trump declared a national emergency on March 13, and states are struggling to get their systems working to deliver $260 billion in new aid approved by Congress.
Democrats and some Republicans argue that the Labor Department needs to be more aggressive about disbursing money and technical assistance to states to shore up the unemployment insurance system. The department has released only half of $1 billion in administrative support for states that Congress approved almost a month ago.
Sen. Lindsay O. Graham (R-S.C.) said Thursday in an interview that he has talked to Scalia about the need to speed things up.
“You could have massive civil unrest if these systems cannot get checks out the door. We’re talking about 20 percent unemployment, maybe even more,” Graham said. “The application process is a nightmare. The state systems are failing.”
Graham said that Scalia has been responsive, but, “I don’t see any action being taken.”
Labor Department officials said Scalia is moving rapidly to help U.S. workers in an unprecedented time. They pointed to a poster and guidebook that OSHA released with steps companies “can take” to reduce worker risk of coronavirus exposure.
“Under Secretary Scalia’s leadership, in the last two weeks, the department has quickly released new rules and guidance for states, businesses, and individual Americans to help those in need of relief,” said Patrick Pizzella, deputy labor secretary. “The department has already distributed nearly $500 million in additional administrative funding to 39 states.”
Still, Scalia has made clear he is wary of taking an excessively lax approach to disbursing aid, an argument that he used to help win GOP support for recent legislation. Writing on Fox Business Network’s website on Monday, he warned that he does not want unemployed people to become addicted to government aid.
“We want workers to work, not to become dependent on the unemployment system,” Scalia wrote with Small Business Administration chief Jovita Carranza. “Unemployment is not the preferred outcome when government stay-at-home orders force temporary business shutdowns.”
On the day the $2 trillion package passed the Senate, Scalia spoke with Sens. Rob Portman (R-Ohio), Ben Sasse (R-Neb.) and Tim Scott (R-S.C.), who had raised concerns the law’s new unemployment benefits were too large and would deter workers from returning to jobs.
Scalia told conservative senators that once enacted, his agency would ensure the provisions his agency oversees would not hurt U.S. companies, according to three congressional officials aware of the conversations and granted anonymity to discuss the call.
Narrowing rules
Two recent laws passed by Congress expanded paid and sick leave policies as well as the size and scope of unemployment benefits for Americans. But worker advocates argue that as Scalia begins to implement these measures, his department is being much less generous toward workers than toward companies.
New Labor Department guidance says unemployment benefits apply to gig workers only if they are “forced to suspend operations,” which could dramatically limit options for those workers if their apps are still operating. Other workers also face a high hurdle to qualify for benefits.
The guidance says a worker “may be able to return to his or her place of employment within two weeks” of quarantining, and parents forced to stop work to care for kids after schools closed are not eligible for unemployment after the school year is over. Workers who stay home because they are older or in another high-risk group are also ineligible unless they can prove a medical professional advised them to stop working.
Some states are also having a difficult time figuring out how to verify how much money self-employed workers typically earn. It might require looking at tax documents, which unemployment offices don’t usually have access to.
“Some of the requirements, the standards that we’re being held to, are going to be incredibly difficult to adhere to,” Maine Labor Commissioner Laura Fortman said.
A Labor Department spokesperson said the agency is “providing as much technical assistance and IT support as possible” to states, some of which are using computer systems that are several decades old.
Scalia’s agency is also in charge of overseeing the new paid sick and family leave regulations, which apply to companies with fewer than 500 employees during the pandemic. The law gave the Labor Department authority to exempt businesses with under 50 employees from providing 12 weeks of paid family leave to care for a child out of school if the leave policy threatens to bankrupt the company.
Businesses that deny workers paid leave don’t have to send the government any paperwork justifying why. The Labor Department’s guidance asks companies to “retain such records for its own files,” a contrast with the heavy documentation required from gig workers who must prove they were affected by the coronavirus outbreak to get aid.
A Labor Department spokesperson said its rules on paid sick and family leave follow Congress’ direction.
“The department’s new rule balances allowing workers to take paid leave to care for their children with keeping small businesses open — as instructed by Congress,” a spokesperson said.
Tension at OSHA
Some Labor Department staffers and outside critics have also faulted Scalia for his handling of OSHA, which falls under his jurisdiction.
The CDC has issued recommendations for the public and businesses to follow practices such as social distancing and sanitizing workstations. OSHA could make those guidelines mandatory for all employers or for all essential employees but has not done so.
“Some of the OSHA staff is frustrated they can’t do more to protect workers. They want an emergency standard that would require employers to follow CDC guidelines,” said David Michaels, a George Washington University School of Public Health professor who served as assistant secretary of labor for occupational safety and health in the Obama administration.
Under Scalia, OSHA has also decided against issuing safety requirements to protect hospital and health-care workers, including rules that would mandate nurses and other providers be given masks and protective gear recommended by the CDC when at risk of exposure.
The union National Nurses United petitioned Scalia to increase the requirements during the pandemic, but a union spokeswoman said the Labor Department has not even acknowledged receipt of the letter.
Hospitals have resisted these rules for years. Tom Nickels, the chief lobbyist for the American Hospital Association, said that he hadn’t spoken to Scalia but that his group has opposed these actions in conversations with OSHA staff because widening the use of N95 respirator masks would be impractical. “The equipment is in short supply,” he said. “We can’t get it.”
OSHA also has not taken significant action to protect workers from retaliation when they speak out about dangerous conditions that expose them to coronavirus, Michaels said.
When workers at a manufacturing plant in northern Illinois tried alerting government officials about their concerns about working shoulder to shoulder, the regional OSHA official responded that “all OSHA can do is contact an employer and send an advisory letter outlining the recommended protective measures,” according to an email reviewed by The Washington Post. “This isn’t very helpful for you or your labor group, but it is the best I have to offer,” the email said.
On Wednesday, OSHA sent out a news release reminding companies that it is “illegal to retaliate against workers because they report unsafe and unhealthful working conditions during the coronavirus pandemic.”
“OSHA has completely abandoned their responsibility to protect workers on the job,” said Debbie Berkowitz, who worked at OSHA in the Obama administration and is now director of the worker safety and health program at the National Employment Law Project. “I have never felt this way, that every worker is at the mercy at their boss of whether they get protected. People are going to get sick and die, and they don’t have to.”
This week, Scalia said OSHA would take all worker safety concerns seriously.
“We are fielding calls from workers worried about their health and from workers who believe they have been illegally disciplined by their employer for expressing health concerns,” he said. “We will not tolerate retaliation.”
What Will U.S. Labor Protections Look Like After Coronavirus?
As I was writing the draft of this article, I was checking my symptoms and awaiting the results of a test I underwent for Covid-19. This virus has upended my life, as it has for every last one of us, no matter where we fall on the socio-economic scale.
But the consequences fall more heavily on those at the bottom end of the wage distribution. That includes those risking their health as they sell us groceries, check our vitals, and sanitize our hospitals. Easily lost amid the chaos, however, is how this crisis may be an opportunity to improve employee protections — and not temporarily but permanently.
During bull markets, employers and policymakers often paint the hardships befalling low-wage workers as stemming from those workers’ personal failures. But when markets crash, we learn how these workers’ troubles were indicative of persistent, system-wide weaknesses.
As Warren Buffett wrote of the insurance failures exposed by 1993’s Hurricane Andrew, “It’s only when the tide goes out that you learn who’s been swimming naked.” Pundits cite Buffet to refer to firms that appear healthy during bull markets, only to get eaten alive during downturns. This month, however, the markets exposed a new group of skinny dippers: a government and an economic system that fail workers, and employers who haven’t or can’t fill this gap in public policy.
In response to the novel coronavirus, the stock market has been mostly in a free fall since late February. The low-wage service sector is facing widespread layoffs. And the tumbling markets have uncovered other deep inequalities among workers, who fall into two groups: those with access to employment protections like affordable healthcare, remote work accommodations, paid time off, and job security — and those without.
This second group, which includes the working class, often lack healthcare or face high out-of-pocket expenses. There are nearly 24 million uninsured working-age adults in the United States. Those with only a high school diploma or who did not complete high school are the least likely to be insured. Moreover, racial and ethnic minority groups face significant barriers to “good jobs.” They form 60% of the uninsured population but only 40% of the total population.
A quarter of all U.S. workers have no access to paid sick leave. Work-from-home options are slim, but many can’t afford not to work. Among workers at the bottom 10th of the earnings distribution, only 31% have paid sick leave. For comparison, 94% of the top 10% of earners have paid sick leave.
While many professionals enjoy protections that can help them ride out the pandemic with their livelihoods and family’s health intact, workers in the low-wage service sector have few options or resources to stay home to care for themselves, let alone their loved ones. And that burden to provide care largely falls on women. The workers lacking healthcare and paid sick leave are also the most vulnerable to layoffs and lost hours. The fate of service workers in travel and food services indicate what’s to come. Similarly, gig economy workers, migrant laborers, and those in the informal economy are particularly vulnerable.
How did we get here? Since the late 1970s, executives have prioritized boosting dividends for shareholders over protecting their employees, whose work has been outsourced, digitized, and downsized. In our book, Divested: Inequality in the Age of Finance, Ken-Hou Lin and I show how this shift in corporate governance undermined workers’ bargaining power. Although insurance coverage increased from the Affordable Care Act, overall working conditions, protections, and pay have diminished.
A more robust safety net would help to mitigate the consequences for workers today as it shores up the economy against future downturns. For years, U.S. policymakers have considered universal healthcare impractical because of its large scope and high startup costs. But as new unemployment claims surge to historical levels and Americans face the medical precarity of a pandemic, this crisis has laid bare the underlying problem of linking healthcare to employment.
Sick leave and universal healthcare would ease the stressors workers face and ensure the sick have time to recover, making them more productive when they return to work. Without the costs of insuring workers, employers could pay more. An income boost would generate more spending and stimulate the economy.
Broader protections would also support the self-employed, contract workers, and prospective entrepreneurs. The United States has lower rates of self-employment (6.3%) than countries with universal healthcare (e.g., Spain has 16%), and a lower share of employment at small businesses than any OECD country except Russia. Reducing the reliance on big businesses would free workers to find jobs that better fit their skills, creating a more nimble and innovative economy.
The current moment provides an opportunity to make lasting changes to the status quo and improve conditions for all workers. As sociologists have theorized, crises and crashes expose cracks in the systems upholding inequality. And history provides a clue for how crises can provide opportunities to transform society in ways that reduce inequality. After the Great Crash of 1929, unemployment spiked, reaching 25% by 1933. In less than three years, Franklin D. Roosevelt’s New Deal reduced unemployment to 9%.The New Deal achieved this feat through a vast and broad range of public works and conservation projects.
The New Deal transformed American society — from erecting iconic buildings and statues, to saving the whooping crane, to developing the rural United States, to planting a billion trees. New Deal workers built and renovated 2,500 hospitals, 45,000 schools, and 700,000 miles of roads. The New Deal hired 60% of the unemployed, including 50,000 teachers and 3,000 writers and artists, such as Jackson Pollock and Willem de Kooning. The New Deal modernized, preserved, and employed the country, while reducing inequality between the haves and have-nots.
Facing a similar economic threat in the wake of the pandemic, we have a comparable once-in-a-century opportunity to make lasting changes that address the pressing problems of today, from inequality to climate change.
In today’s crisis, we could double down on the “trickle-down” approach of the 2008 financial crisis: stimulus to the banks, corporations, and their investors combined with tax cuts and temporary wage support as a short-term Band-Aid for immiserated workers. But Lin and I find that this approach left many workers flailing and worsened inequality, because the banks deposited, rather than invested, the stimulus funding and corporations borrowed the money to buy back their stocks, enriching top executives and shareholders.
Last week, the president signed into law a sweeping $2 trillion plan that combines money for states, loans for distressed businesses, and tax relief, paid leave, unemployment benefits, and cash for most citizens. But this plan only gives workers temporary benefits. Although the bill has stricter oversight and restricts buybacks, it is unlikely to reduce inequality unless it addresses the structural conditions making some workers more vulnerable.
While a New Deal approach may be infeasible amid a contagious virus, we can and should enact permanent policies protecting all workers. Sick leave and healthcare should be universal rights. We could adopt a “flexicurity” labor policy modeled on the Danish one. The Danes provide both flexibility for employers to hire and fire workers as needed and security for workers through generous benefits and retraining opportunities during unemployment.
Meanwhile, in my household, after 2.5 weeks of symptoms—from a dry cough to a tight chest to a low fever—my test results came back negative. Thanks to the healthcare and insurance provided by my employer, I will continue to do the work I care about.
While I am on the mend, the workers who sell our groceries, serve us food, clean our workplaces, and drive us to the doctor also need to take care. In this pandemic, they are risking their health and lives. And they deserve the same level of care as the people they serve: access to both preventative medicine and comprehensive treatment, and time to take a break, recover, and care for their loved ones. The coronavirus is our chance to extend these protections during times of crisis and far into the future.
Another 6.6 million jobless claims filed last week amid coronavirus crisis
Another 6.6 million Americans filed for unemployment last week, the Labor Department announced Thursday.
Why it matters: It adds to the staggering 10 million jobless claims in recent weeks — by far the sharpest spikes in American history — as the world economy has ground to a halt in an effort to contain the coronavirus outbreak.
- The once-again colossal number of filings was worse than the 5 million that Wall Street had expected.
- Last week’s unemployment claim numbers, which government data had pegged at 6.65 million, were revised upward to 6.87 million — the highest ever recorded.
The big picture: The data lags by a week, so while a large portion of the economic shutdown is now evident over the last three weeks, there may still be more huge numbers yet to come.
- The $2.2 trillion coronavirus stimulus package opened the door to a surge of new unemployment filings, allowing the self-employed and independent contractors to claim benefits.
Medicaid nearing ‘eye of the storm’ as newly unemployed look for coverage
As the coronavirus roils the economy and throws millions of Americans out of work, Medicaid is emerging as a default insurance plan for many of the newly unemployed. That could produce unprecedented strains on the vital health insurance program, according to state officials and policy researchers.
Americans are being urged to stay home and practice “social distancing” to prevent the spread of the virus, causing businesses to shutter their doors and lay off workers.
The Labor Department reported Thursday that more than 6.6 million people signed up for unemployment insurance during the week that ended March 28. This number shattered the record set the previous week, with 3.3 million sign-ups. Many of these newly unemployed people may turn to Medicaid for their families.
Policymakers have often used Medicaid to help people gain health coverage and healthcare in response to disasters such as Hurricane Katrina, the water crisis in Flint, Michigan, and the 9/11 terrorist attacks. But never has it faced a public health crisis and economic emergency in which people nationwide need its help all in virtually the same month.
“Medicaid is absolutely going to be in the eye of the storm here,” said Joan Alker, executive director of the Georgetown University Center for Children and Families. “It is the backbone of our public health system, our public coverage system, and will see increased enrollment due to the economic conditions.”
Meeting those needs will require hefty investments―both in money and manpower.
Medicaid—which is run jointly by the states and federal government and covers about 70 million Americans―is already seeing early application spikes. Because insurance requests typically lag behind those for other benefits, the numbers are expected to grow in the coming months.
“We have been through recessions in the past, such as in 2009, and saw what that meant,” said Matt Salo, who heads the National Association of Medicaid Directors. “We are going to see that on steroids.”
The majority of states have expanded their Medicaid programs since 2014 to cover more low-income adults under a provision in the Affordable Care Act (ACA). That may help provide a cushion in those areas. In the 14 states that have chosen not to expand, many of the newly unemployed adults will not be eligible for coverage.
It’s possible the pandemic could change the decision-making calculus for non-expansion states, Salo said. “The pandemic is like a punch in the mouth.”
But even without expansion in those states, the Medicaid rolls could increase with more children coming into the system as their families’ finances deteriorate. Many states don’t have the resources or systems in place to meet the demand.
“It is going to hit faster and harder than we’ve ever experienced before,” Salo said.
The unique circumstances of social distancing impose new challenges for those whose jobs are to enroll people for coverage. In California, where more than a million people have filed for unemployment insurance since March 13, much of the workforce that would typically be signing people up and processing their paperwork is now working from home, which adds a layer of complexity in terms of accessing files and documents, and can inhibit communication.
“It’s going to be certainly more difficult than it was under the [2008] recession,” said Cathy Senderling-McDonald, deputy executive director for the County Welfare Directors Association of California. She said that although strides have been made in the past decade to set up better online forms and call centers, it will still be a heavy lift to get people enrolled without seeing them in person.
In some states, the challenges to the system are already noticeable.
Utah, for instance, has seen a 46% increase in applications for Medicaid. (These applications can be for individuals or families.) In March 2019, about 14,000 people applied. This March, it was more than 20,400.
“Our services are needed now more than ever,” said Muris Prses, assistant director of eligibility services for the Utah Department of Workforce Services, which processes Medicaid enrollment. The state typically takes 15 days to determine whether someone is eligible, he said, though that will increase by several days because of the surge in applicants and some staff working at home.
In Nevada, where the hotel- and casino-dominated economy has been hit particularly hard, applications for public benefits programs, including food stamps and Medicaid, skyrocketed from 200 a day in February to 2,000 in mid-March, according to the state Department of Health and Human Services. The volume of calls to a consumer hotline for Medicaid and health coverage questions is four times the regular amount.
In Ohio, the number of Medicaid applications has already exceeded what’s typical for this time of year. The state expects that figure to continue to climb.
States that haven’t yet seen the surge warned that it’s almost certainly coming. And as layoffs continue, some are already experiencing the strains on the system, including processing times that could leave people uninsured for months, while Medicaid applications process.
For 28-year-old Kristen Wolfe, of Salt Lake City, who lost her job and her employer-sponsored health insurance March 20, it’s a terrifying time.
Wolfe, who has lupus—an autoimmune disorder that requires regular doctor appointments and prescription medication―quickly applied for Medicaid. But after she filled in her details, including a zero-dollar income, she learned the decision on her eligibility could take as long as 90 days. She called the Utah Medicaid agency and, after being on hold for more than an hour, was told they did not know when she would hear back.
“With my health, it’s scary to leave things in limbo,” said Wolfe, who used her almost-expired insurance last week to order 90-day medication refills, just in case. “I am pretty confident I will qualify, but there is always the ‘What if I don’t?’”
Others have reported smoother sailing, though.
Jen Wittlin, 33—who, until recently, managed the now-closed bar in Providence, Rhode Island’s Dean Hotel―qualified for Medicaid coverage starting April 1. She was able to sign up online after waiting about half an hour on the phone to get help answering specific questions. Once she receives a check for unemployment insurance, the state will reassess her income—currently zero―to see if she still qualifies.
“It was all immediate,” she said.
In fact, she said, she is now working to help newly uninsured former colleagues also enroll in the program, using the advice the state gave her.
In California, officials are trying to reassign some employees—who are now working remotely―to help with the surge. But the system to determine Medicaid eligibility is complicated and requires time-intensive training, Senderling-McDonald said. She’s trying to rehire people who’ve retired and relying on overtime from staffers.
“It’s hard to expand this particular workforce very, very quickly by a lot,” she said. “We can’t just stick a new person in front of a computer and tell them to go. They’re going to screw everything up.”
The move away from in-office sign-ups is also a disadvantage for older people and those who speak English as a second language, two groups who frequently felt more comfortable enrolling in person, she added.
Meanwhile, increasing enrollment and the realities of the coronavirus will likely create a need for costly medical care across the population.
“What about when we start having many people who may be in the hospital, in ICUs or on ventilators?” said Maureen Corcoran, the director of Ohio’s Medicaid program. “We don’t have any specific answers yet.”
These factors will hit just as states―which will experience shrinking tax revenue because of the plunging economy—have less money to pay their share of the Medicaid tab.
“It’s all compounded,” said Lisa Watson, a deputy secretary at Pennsylvania’s Department of Human Services, which oversees Medicaid.
The federal government pays, on average, about 61% of the costs (PDF) for traditional Medicaid and about 90% of the costs for people who joined the program through the ACA expansion. The rest comes from state coffers. And, unlike the federal government, states are constitutionally required to balance their budgets. The financial squeeze could force cuts in other areas, like education, child welfare or law enforcement.
On March 18 (PDF), Congress agreed to bump up what Washington pays by 6.2 percentage points (PDF) as part of the second major stimulus bill aimed at the economic consequences of the pandemic. That will barely make a dent, Salo argued.
“The small bump is good, and we are glad it’s there, but in no way is that going to be sufficient,” he said.
During a Pandemic, an Unanticipated Problem: Out-of-Work Health Workers
https://www.yahoo.com/news/during-pandemic-unanticipated-problem-health-150355070.html
As hospitals across the country brace for an onslaught of coronavirus patients, doctors, nurses and other health care workers — even in emerging hot spots — are being furloughed, reassigned or told they must take pay cuts.
The job cuts, which stretch from Massachusetts to Nevada, are a new and possibly urgent problem for a business-oriented health care system whose hospitals must earn revenue even in a national crisis. Hospitals large and small have canceled many elective services — often under state government orders — as they prepare for the virus, sending revenues plummeting.
That has left trained health care workers sidelined, even in areas around Detroit and Washington, where infection rates are climbing, and even as hard-hit hospitals are pleading for help.
“I’m 46. I’ve never been on unemployment in my life,” said Casey Cox, who three weeks ago worked two jobs, one conducting sleep research at the University of Michigan and another as a technician at the St. Joseph Mercy Chelsea Hospital near Ann Arbor, Michigan. Within a week, he had lost both.
Mayor Bill de Blasio of New York has begged doctors and other medical workers from around the country to come to the city to help in areas where the coronavirus is overwhelming hospitals.
“Unless there is a national effort to enlist doctors, nurses, hospital workers of all kinds and get them where they are needed most in the country in time, I don’t see, honestly, how we’re going to have the professionals we need to get through this crisis,” de Blasio said Friday morning on MSNBC.
And the Department of Veterans Affairs is scrambling to hire health care workers for its government-run hospitals, especially in hard-hit New Orleans and Detroit, where many staff members have fallen ill. The department moved to get a federal waiver to hire retired medical workers to beef up staff levels.
But even as some hospitals are straining to handle the influx of coronavirus patients, empty hospital beds elsewhere carry their own burden.
“We’re in trouble,” said Gene Morreale, the chief executive of Oneida Health Hospital in upstate New York, which has not yet seen a surge in coronavirus patients.
Governors in dozens of states have delivered executive orders or guidelines directing hospitals to stop nonurgent procedures and surgeries to various degrees. Last month, the U.S. surgeon general, Dr. Jerome M. Adams, also implored hospitals to halt elective procedures.
That has left many health systems struggling to survive.
Next week, Morreale said, Oneida will announce that it is putting 25% to 30% of its employees on involuntary furlough. They will have access to their health insurance through June. Physicians and senior staff at the hospital have taken a 20% pay cut.
“We’ve been here 121 years, and I’m hoping we’re still there on the other side of this,” Morreale said.
Appalachian Regional Healthcare, a 13-hospital system in eastern Kentucky and southern West Virginia, has seen a 30% decrease in its overall business because of a decline in patient volume and services related to the pandemic. Last week, the hospital system announced it would furlough about 8% of its workforce — around 500 employees.
Hospital executives across the country are cutting pay while also trying to repurpose employees for other jobs.
At Intermountain Healthcare, which operates 215 clinics and 24 hospitals in Utah, Idaho and Nevada, about 600 of the 2,600 physicians, physicians assistants and registered nurses who are compensated based on volume will see their pay dip by about 15%, said Daron Cowley, a company spokesman.
Those reductions are tied to the drop in procedures, which has fallen significantly for some specialties, he said. The organization is working to preserve employment as much as possible, in part by trying to deploy 3,000 staff members into new roles.
“You have an endoscopy tech right now that may be deployed to be at hospital entrances” where they would take the temperatures of people coming in, Cowley explained.
In Boston, a spokesman for Partners HealthCare, with 12 hospitals, including Massachusetts General and Brigham and Women’s, said staff members whose work has decreased are being deployed to other areas or will be paid for up to eight weeks if no work is available.
But redeployment is not always an option. Janet Conway, a spokeswoman for Cape Fear Valley Health System in Fayetteville, North Carolina, said many of the company’s operating room nurses trained in specialized procedures have been furloughed because their training did not translate to other roles.
“Those OR nurses, many have never worked as a floor nurse,” she said.
Conway said nearly 300 furloughed staff members have the option to use their paid time off, but beyond that, the furlough would be unpaid. Most employees are afforded 25 days per year.
Some furloughed hospital workers are likely to be asked to return as the number of coronavirus cases rise in their communities. But the unpredictable virus has offered little clarity and left hospitals, like much of the economy, in a free fall.
Many health systems are making direct cuts to their payrolls, eliminating or shrinking performance bonuses and prorating paychecks to mirror reduced workload until operations stabilize.
Scott Weavil, a lawyer in California who counsels physicians and other health care workers on employment contracts, said he was hearing from doctors across the country who were being asked to take pay cuts of 20% to 70%.
The requests are coming from hospital administrators or private physician groups hired by the hospitals, he said, and are essentially new contracts that doctors are being asked to sign.
Many of the contracts do not say when the cuts might end, and are mostly affecting doctors who are not treating coronavirus patients on the front lines, such as urologists, rheumatologists, bariatric surgeons, obstetricians and gynecologists.
Such doctors are still being asked to work — often in a decreased capacity — yet may be risking their health going into hospitals and clinics.
“It’s just not sitting well,” Weavil said, noting that he tells doctors they unfortunately have few options if they want to work for their institution long term.
“If you fight this pay cut, administration could write your name down and remember that forever,” he said he tells them.
In other cases, physicians are continuing to find opportunities to practice in a more limited capacity, like telemedicine appointments. But that has not eliminated steep pay cuts.
“Physicians are only paid in our clinic based on their productivity in the work they do,” said Dr. Pam Cutler, the president of Western Montana Clinic in Missoula. “So they’re automatically taking a very significant — usually greater than 50% or 25% — pay cut just because they don’t have any work.”
In some areas, layoffs have left behind health care workers who worry that they will not be able to find new roles or redeploy their skills.
Cox in Michigan said he was briefly reassigned at his hospital, helping screen and process patients coming in with coronavirus symptoms, but eventually the people seeking reassignments outgrew the number of roles.
He also expressed concern that inevitable changes in the health care industry after the pandemic — paired with the possibility of a lengthy period of unemployment — could make it difficult to get his job back.
“I’m just concerned that the job I got laid off from may not be there when this is over,” Cox said. “The longer you’re away, the more you worry, ‘Am I going to be able to come back?’ So there’s a lot of anxiety about it.”
Even as many of the largest hospital networks grapple with sudden financial uncertainty, much smaller practices and clinics face a more immediate threat.
According to a statistical model produced by HealthLandscape and the American Academy of Family Physicians, by the end of April, nearly 20,000 family physicians could be fully out of work, underemployed or reassigned elsewhere, particularly as cities like New York consider large-scale, emergency reassignments of physicians.
“Many of these smaller practices were living on a financial edge to start with, so they’re not entering into this in a good position at all,” said Dr. Gary Price, the president of the Physicians Foundation. “Their margins are narrower, their patients don’t want to come in, and many of them shouldn’t anyway, so their cash flow has been severely impacted and their overhead really hasn’t.”
Nonprofit hospitals vulnerable to coronavirus-related market fallout, Fitch says
Continued market losses prompted by the COVID-19 pandemic will likely weaken key liquidity metrics and pressure the ratings of some nonprofit hospitals, according to a new Fitch Ratings report.
About half of Fitch’s rated nonprofit hospitals have 10 percent to 40 percent of their portfolios invested in equities, but other nonprofit hospitals exceed this range by a wide margin, Fitch noted.
Throughout the last month, the stock market suffered historic losses, which caused hospitals with more aggressive asset allocation to underperform their more conservative counterparts by 10 percent to 25 percent, Fitch said.
Fitch said that hospitals in the last few weeks have seen a median loss of about 30 days of cash on hand. It noted this metric is not “an immediate concern yet, given the ample liquidity these hospitals have.”
But Fitch said most hospitals have cash on hand to fund about 200 days of operations.
The ratings agency said the market likely will remain volatile, and “time will tell if and how the stock market declines eat into a hospital’s reserves.”
Quorum says it may have to file for bankruptcy
https://www.healthcaredive.com/news/quorum-10k-delay-bankruptcy-warning/575491/
Dive Brief:
- For-profit hospital operator Quorum Health said in a recent filing with the Securities and Exchange Commission that it may have to file for Chapter 11 bankruptcy to address current liquidity needs while continuing to care for patients and keep its hospitals operating.
- The company said it’s in ongoing discussions with certain debt holders concerning a recapitalization or financial reorganization transaction.
- Quorum also announced in the SEC filing that it will be late to file its annual 10-K report, covering financials for its fiscal year ending December 31, 2019.
Dive Insight:
COVID-19 has upended hospitals’ typical operations, prompting many to halt lucrative elective surgeries and cancel doctors visits to preserve staff and resources. Some worry those patients and revenue may never come back as unemployment claims go up and people lose their employer-sponsored health coverage.
Tennessee-based Quorum Health, which operates 24 hospitals in 14 states, may have already been more ill-positioned financially than other systems for such a pandemic.
Quorum missed Wall Street earnings expectations in its most recent financials for the third quarter of 2019, posting a net loss of almost $76 million and a revenue decline almost 9% year over year. The company now said it’s delaying its 10K report with its most recent financials due to restructuring talks, but has 15 days to do so.
The for-profit chain went public in May 2016 with 38 hospitals – 14 of which have since shuttered. In 2017 private equity firm KKR took a 5.6% stake in the system for $11.3 million.
Beyond being Quorum’s largest debt-holder today, KKR also owns about 9% of its public shares. In December, the firm offered to buy Quorum out and take the hospital chain private at $1 a share.
While negotiating with debt holders and weighing its options, Quorum intends to maintain all operations at its hospitals without any interruption in service, CEO Robert Fish said in a statement.
“Our facilities play a critically important role in their communities and the fight against COVID-19,” Fish said. “We are intensely focused on ensuring our employees have the resources they need to provide quality care to the patients and communities they serve, now and well into the future.”
The Memo: Scale of economic crisis sends shudders through nation
The Memo: Scale of economic crisis sends shudders through nation
New data released Thursday revealed the scale of the economic devastation wrought by the coronavirus crisis — and experts say there is no end in sight.
More than 6.6 million new unemployment claims were filed during the week ending March 28, according to the Department of Labor. The figure was double that of the previous week, which had itself been by far the highest since records began.
The stark reality is that roughly 10 million people have been dumped from their jobs in two weeks. A previously robust economy has been scythed down by the virus. A nation that had been enjoying its lowest unemployment rate for decades is now virtually certain to see jobless totals surpass those of the Great Recession a decade ago.
“The present economic situation is awful,” said Jason Furman, a Harvard University professor who served as chairman of President Obama’s Council of Economic Advisers. “The data is just telling us what we can see with our own eyes — there is very little business happening.”
Economists who had already been deeply worried about the immediate outlook are now wondering if their earlier projections were in fact too rosy.
“In our earlier scenario, we had expected 6.5 million job losses by May,” said Beth Ann Bovino, the chief U.S. economist at Standard & Poor’s. That figure will be exceeded, she now believes, given that there were “more lockdowns, more business closures and more businesses just trying to keep themselves alive” by laying off workers.
Heidi Shierholz, senior economist and director of policy at the Economic Policy Institute, said that even the 10 million figure for new unemployment claims was “likely a massive undercount” of actual losses because, during that period, self-employed people and workers in the so-called “gig economy” were generally not eligible to apply. This is changing as a consequence of the package recently passed by Congress that extends eligibility for unemployment benefits, as well as providing other aid for businesses and individuals.
“Our estimate is that by the end of June, 20 million people will have lost their jobs — and I am wondering if even that is optimistic,” Shierholz said.
The political ramifications of such a huge economic shock are unknowable.
President Trump had been looking forward to using the economy as his strongest card as he seeks a second term in November. That card has been shredded.
Trump has promised repeatedly during his White House briefings on the crisis that the nation can bounce back very fast once the public health dangers have receded.
Trump’s approval ratings have also ticked up modestly since the crisis began in many polls. He may be benefitting from the traditional “rallying around the flag” effect that has occurred in previous moments of crisis.
President George W. Bush, for example, hit 90 percent approval in a Gallup poll — the highest result for any president in the polling organization’s history — right after the terrorist attacks of Sept. 11, 2001.
In a statement on Thursday, probable Democratic nominee Joe Biden hit Trump for “failing to prepare our nation” for the ramifications of the coronavirus crisis. Biden called on Trump to allow open enrollment in the Affordable Care Act and also jabbed at Treasury Secretary Steven Mnuchin for having referred to previous unemployment figures as “not relevant.”
In response, Trump campaign communications director Tim Murtaugh blasted back at Biden for “ineffectively sniping from the sidelines, stumbling through television interviews, and hoping for relevance and political gain.”
Economic experts caution that Trump’s promises of a v-shaped recovery, in which the nation jolts itself back into strong economic shape quickly, are almost certainly unrealistic. It will not be a matter of the nation simply rolling the shutters back up and returning to business as usual.
“The economy is not symmetrical,” said Furman. “It is easier to separate someone from a job than to connect someone to a job. In recessions, the unemployment rate can go up very quickly and it comes down very slowly. The worry is that this will be like that.”
Several economic experts who spoke with The Hill made similar points, unprompted, as to the ways the federal government could ease the crisis.
One refrain was that huge assistance needs to be made available to states. States are generally required to balance their budgets. In a situation like the current one, where their tax revenue is cratering, this means they are obligated to severely cut spending — something that most economists believe would deepen and prolong the recession.
Another theme was the need to tie together financial assistance for businesses and the retention of employees.
The recently passed stimulus package makes some effort to do that, particularly in the case of small businesses. The Paycheck Protection Program extends loans to small businesses based upon eight weeks of payroll costs plus an additional 25 percent of the total.
The payroll portion of the loans would be forgiven — rendering them in effect a grant, not a loan — so long as the workforce was maintained at existing levels.
Economic experts praise the principle but worry that the total amount of money in the pot for these loans — $349 billion — may not be enough.
“The small business subsidies will be critical,” said Steven Hamilton, an assistant professor of economics at The George Washington University. “The government needs to get the word out on those, and Congress will likely need to pass an expansion both to adequately fund the existing scheme and to make the scheme more generous to businesses to keep them from laying off workers.”
The public seems to share the view that the aid package, which also includes checks of up to $1,200 for individuals, is a move in the right direction — but unlikely to suffice.
A CBS News poll released late Thursday afternoon indicated 81 percent of Americans support the recent legislation but 57 percent also say it likely won’t be enough.
The same trepidation is shared by the experts, given the unprecedented nature of the coronavirus and the economic crisis it has created.
“It’s like nothing we have ever seen before,” said Shierholz.
HENRY KOTULA 