Banner Health to furlough 5%-7% of nationwide staff as elective procedure revenue drops

PHOENIX — Banner Health plans to furlough between 5% and 7% of its staff nationwide, including about 70 in Northern Colorado, as efforts to prepare American hospitals for waves of novel coronavirus outbreaks have cut off revenue streams from more-profitable forms of care.

In a statement, the Phoenix-based health-care system said it has shifted 1,500 employees who were in elective procedure disciplines to the COVID-19 response, but a portion of the system’s workforce now has “low or no work” as a result of the current financial environment. It also allowed staffers to take a month of unpaid sabbatical.

All of the furloughed employees will have their benefits paid in full, and Banner expects many of them will return to work early next month.
“For many team members, this (work stoppage) may be just two weeks long as we anticipate work may increase in many areas,” the company said.
Banner has also frozen all hiring not connected to COVID-19 response and slashed executive pay by up to 20%.

Local Banner spokeswoman Sara Quale said about 70 of its staffers in Northern Colorado have been furloughed or took a sabbatical, equalling 4% of its local workforce of 1,750.

While hospitals and health-care systems have reorganized to manage the peak of COVID-19 cases across the country and avoid a full-on collapse of the care system, the loss of elective procedures have cut off a critical source of revenue from insurers. Many states, including Colorado, have placed a blanket ban on elective procedures to prevent strains on hospital resources and reduce the chance of COVID-19 spread.

Andrew Friedson, a professor of health-care economics at the University of Colorado Denver, said every hospital in Colorado and the U.S. could see drops in revenue because many elective procedures generate net profit for the provider.

“It’s going to depend on how heavily hospitals are cross-subsidizing less profitable procedures and what types of profit margins they are allowed on certain types of overpayments,” he said.

Banner operates at more than 20 locations in Northern Colorado, including major hospitals Banner Fort Collins Medical Center, McKee Medical Center in Loveland and North Colorado Medical Center in Greeley.

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