ER Staffing Company Reverses Benefits Cuts for Doctors and Nurses Fighting Coronavirus

A major medical staffing company said it wouldn’t go through with cuts to doctors’ pay and benefits after ProPublica first reported the plans.

Alteon Health, which employs more than 1,700 doctors and other medical workers nationwide, said Sunday it won’t cut medical directors’ stipends by 20%, as planned, and will continue offering paid time off, which it had said would stop. While Alteon will defer matching 401(k) contributions, it won’t eliminate those contributions, as previously announced.

Executives are still taking a 25% pay cut, and the company, backed by equity investors New Mountain Capital and Frazier Healthcare Partners, said it will reduce administrative expenses by 20%.

In a statement, Alteon said it’s continually reevaluating a fast-moving and unprecedented situation. The company is still converting salaried employees to hourly pay and reducing hours in some places: ER visits have dropped as much as 40% nationwide as non-coronavirus patients stay home and hospitals cancel elective procedures.

“The significant changes in patient visits and behavior patterns are creating disruption for the healthcare system and our community at large,” CEO Steve Holtzclaw said in a message to employees on Sunday. “Our guiding principle as we manage through this situation is that we will concentrate resources and pay on those that are fighting coronavirus, that we act nimbly in response to the environment, and that we incorporate the latest information available to us.”

Alteon is not alone in reshuffling hours, which can result in lower pay for affected doctors, as ProPublica reported on Friday. TeamHealth, owned by private-equity giant Blackstone, is reducing hours for some ER doctors and asking for furloughs from anesthesiologists. SCP Health, another medical staffing company backed by the investment firm Onex Corporation, is cutting salaries for nurse practitioners and physician’s assistants. The companies said they’re adapting to lower demand.

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Envision Healthcare, whose private-equity backer is KKR, is withholding pay and considering salary cuts among its more than 25,000 clinicians, Bloomberg reported. “Envision Healthcare is 100% focused on saving lives and sustaining the nation’s fragile healthcare system,” the company said in a statement.

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Most hospitals don’t employ ER doctors directly but instead contract with practice groups, which have increasingly been bought and bundled into staffing companies by private-equity investors. Vanishing income from routine care is also prompting furloughs and pay cuts at hospital operators, both nonprofit and for-profit.

While some hospitals are struggling with an onslaught of COVID-19 patients, others are suddenly less busy.

“We have to have some level of staffing flexibility,” Holtzclaw said in Sunday’s message. “If a clinician isn’t going to be busy working at a hospital, we don’t want them exposed to the virus. The best thing for their health and safety is to have them home resting with their families and preparing for surges.”

Alteon said it’s lowering its threshold for health insurance so that employees working fewer hours will still be covered. It’s also paying employees who are isolating themselves because of exposure to the coronavirus.