More job cuts are coming at Prisma Health as SC hospitals cope with coronavirus effects

Nathaniel Cary
Greenville News

This story was updated on June 9, 2020, to reflect that information initially attributed by Prisma as a statement from interim chief financial officer Michael Burke was not a direct quote from Burke.

Prisma Health, the state’s largest hospital system, has and will continue to eliminate jobs to streamline its operations in the wake of the coronavirus pandemic to better position itself for financial challenges facing the health-care industry, officials have told The Greenville News.

The news comes as the latest credit rating for the health system warns that the pandemic may affect Prisma's financial health into 2021 if a second wave of the virus hits South Carolina.

Two other Upstate hospital systems — Bon Secours St. Francis and AnMed Health — said they’ve not had to eliminate jobs, though each placed employees on furlough after Gov. Henry McMaster asked hospitals to limit elective procedures to keep hospital beds free in case they were needed to treat COVID-19 patients, an order that has since been canceled.

Coronavirus is placing tremendous pressure on Prisma and hospital systems across the country, according to an emailed statement from Michael Burke, Prisma's interim chief financial officer.

At the same time, the health-care industry is "undergoing rapid changes in a number of areas, including lower reimbursements, increasing numbers of uninsured and under-insured, escalating costs of pharmaceuticals, shortages of skilled workers, new technology and an increasing complex regulatory environment," according to the statement.

Prisma was formed, in part, to help address those challenges, Burke's statement said.

Prisma cut jobs as Greenville Health System and Palmetto Health merged 

In January, Prisma announced it would eliminate 327 jobs and leave 200 positions unfilled in a streamlining of its organization after the merger of the Greenville Health System’s eight hospitals and Palmetto Health’s four hospitals in the Midlands.

When the two health systems merged, the combined organization had 32,000 employees.

When the coronavirus hit, Prisma furloughed 1,850 employees and reduced hours for 2,200 more employees, according to Fitch credit rating service. The health system delayed elective procedures to prepare for a potential surge in COVID-19 patients, and patients canceled appointments out of fear of catching the virus.

A paramedic prepares coronavirus testing kits at a Prisma Health community testing site at Augusta Heights Baptist Church Saturday, May 2, 2020.

Now that Prisma has resumed non-emergency care activities, “we are gradually recalling furloughed clinical staff where possible or increasing hours for those team members whose hours were reduced,” Sandy Dees, Prisma’s spokesperson, said in an emailed response to questions.

But, Dees said, the health system anticipates managers will continue to streamline their departments as the health system continues to experience “significantly lower revenues and patient volumes.”

“This streamlining, which includes the reassignment of personnel and the elimination of jobs, will be an ongoing effort as health care, including Prisma Health, rebounds from the COVID-19 pandemic,” she said.

As Prisma lost revenue, it also saw increased costs. The health system converted the entire North Greenville Hospital to treat COVID-19 patients and treated 42.5% of all hospitalized COVID-19 patients in the state by May 25. The hospital system lost $144.5 million in net patient revenue in April alone, Burke said.

That loss was only partially offset by $79 million in grants given to the hospital system as part of the federal coronavirus stimulus package.

Bon Secours says recovery depends on social distancing, wearing masks

Bon Secours hasn’t had to lay off any employees but did furlough and reassign employees, especially in primary care, outpatient and surgical services, said Jennifer Robinson, Bon Secours spokesperson. Robinson didn't say how many employees were affected.

Bon Secours St. Francis had 3,452 employees in the Upstate in 2017, according to tax filings.

Prisma Health employees mask up as they prepare a community testing site for coronavirus tests at Augusta Heights Baptist Church Saturday, May 2, 2020.

“Some of those associates have returned to work as we have resumed some of those services,” Robinson said in an emailed response to questions. “Associates who are furloughed are eligible for unemployment benefits and receive restorative pay through the Bon Secours Mercy Health Associate Emergency Fund.”

The hospital system expects finances to improve over the next few months as patients feel comfortable seeking non-emergency health care again, Robinson said. 

Bon Secours has delayed some of its capital projects but hasn't stopped its growth plan in Greenville, she said.

But a full recovery is dependent on community members feeling confident they can safely re-enter the health-care setting, and it's also dependent on the public’s willingness to help in the continuing fight against COVID-19, including by social distancing and wearing masks in public, she said.

Masks:1.5 million masks flown from China to GSP Airport for Prisma Health hospitals

AnMed Health says there is uncertainty ahead as cases increase

In Anderson, AnMed Health furloughed some staff and reduced hours for many, but the hospital has not had to lay off employees, said Lizz Walker, AnMed spokesperson.

The hospital system has more than 3,600 employees. Walker didn't say how many were furloughed or faced reduced hours.

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AnMed did reduce salaries for management and many of its salaried employees for 12 weeks beginning in April, she said in an email.

Employees look at two wood pallets left on a wall on South Fant Street at AnMed Health, painted with words of encouragement and thanks in Anderson Thursday.

AnMed has restarted some elective procedures and surgeries, but its patient volume and revenue hasn’t bounced back to pre-pandemic levels, and it also has had additional expenses from its pandemic response.

“The remainder of the year is uncertain as the number of COVID-19 cases in the community and state is increasing,” Walker said. “We have delayed many capital projects in this year's plan, with the strategy of conserving cash to offset losses in operations.”

Credit agencies dock Prisma for instability of finances

Prisma took out a $299 million cash advance from the Medicare Accelerated and Advance Payment Program to offset losses brought about by the pandemic, according to the credit ratings agency Fitch Ratings. The money represents six months of hospital Medicare payments and three months of Medicare revenue for the system’s physicians, according to Fitch.

Prisma didn't do as well as expected financially in fiscal year 2019, which ended last September, and was in the midst of its acquisition of three Midlands area hospitals when the coronavirus hit, Fitch said. 

That left the system “less able to deal with the current operating disruptions” from the coronavirus, Fitch said April 23 when it affirmed Prisma’s existing “A-“ rating but downgraded Prisma's outlook from "stable" to "negative."

Fitch warned that Prisma's profit margins could decline this year due to disruptions from the coronavirus. 

But Fitch said Prisma had emergency reserves on hand to last for 140 days of operations, and the agency expected Prisma could get “close to break-even operations” by the end of the fiscal year on Sept. 30.

The negative bond outlook comes after Standard & Poors Global Ratings gave Prisma a negative outlook in mid-March before the pandemic hit South Carolina. Moody’s, on March 10, had downgraded Prisma to A3 from A2 on its scale while also providing a negative outlook.

A lower credit rating can affect interest rates on future bonds as investors see more risk that an organization wouldn't be able to make its debt payments.

"Prisma Health’s finances are fundamentally solid," Burke said. "We are confident that our long-term strategies will work for better and affordable health care for South Carolina."

Many of the financial challenges Prisma is facing are due to being the only safety-net hospitals in the Upstate and Midlands, which means it provides lifesaving care for patients regardless of the patient's ability to pay, Burke said. 

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Prisma’s share of uninsured patients could grow if the pandemic lingers

Prisma has the largest share of the healthcare market both in the Upstate and the Midlands, but it has strong competitors, according to Fitch. Prisma's hospitals are  in growing markets, particularly in Greenville, which grew by 9% population in five years, according to Fitch.

And Prisma had set a 2020 budget to improve its margins before the coronavirus outbreak, Fitch said.  

But since South Carolina hasn’t expanded Medicaid, Prisma also has 8% of its patients pay out of pocket, considered high, according to Fitch.

Longer-term, increased unemployment from the pandemic in a state without Medicaid expansion can result in more patients paying out of pocket, according to Fitch, meaning more people will be left without health insurance. That can make it more difficult for the health system to receive payments quickly and in full, and some patients would be unable to pay at all.

Like other safety net providers who take care of all patients who need lifesaving care whether they have insurance or not, we experience a greater financial burden than others, but it is our commitment to the communities we serve, especially in rural and under-served areas of our state, according to Burke's statement.