Essentia laying off 500 employees

The health system cited revenue setback as it prepares for a COVID-19 surge.

Essentia Health-St. Mary's Medical Center
Essentia Health-St. Mary's Medical Center on East Third Street in Duluth. (File / News Tribune)
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Essentia Health is placing more than 3% of its workforce on “special administrative leave,” the health system announced Monday.

About 500 non-medical staff across the system will be affected, according to an Essentia news release. Essentia, which is based in Duluth, employs about 14,500 people in Minnesota, Wisconsin and North Dakota.

Even as Essentia prepares for a surge in COVID-19, the health system has experienced “a severe disruption in services,” the news release explained.

Essentia projects a 20-40% decrease in revenue because of pandemic-related declines in the overall volume of patients, it said.

Those placed on leave will be able to keep their health insurance for the near term, according to the news release. They also can take vacation time or paid time off to reduce the financial impact. They can apply for unemployment benefits.


The decline in volume reflects the postponement of elective surgeries and procedures, the closing of some clinics and the postponement of routine appointments both to slow the spread of the virus and to preserve personal protective equipment that would be needed in the event of a surge of patients, the news release explained.

Essentia Health is the largest employer in Duluth. A financial filing by the city of Duluth last July showed that Essentia employed 6,569 workers in the city in 2018 — 11.11% of the city’s overall workforce. St. Luke’s was second with 2,051 employees.

It was not immediately clear how many of the laid-off workers are in the Northland.

Essentia is not the only health care employer to cut back on its labor force in the midst of the COVID-19 disruption. Last week, St. Luke’s announced it had laid off seven employees and was reducing hours for others.

On Monday, a New Jersey hospital asked employees to voluntarily accept layoffs, WCAU-TV in Philadelphia reported. Washington Health System in Pennsylvania announced layoffs last week, although the number wasn’t released.

Although layoffs at health systems in the time of a pandemic may seem counterintuitive, Duluth health officials have explained the rationale behind it in recent news conferences.

“We are trying to conserve our resources,” said Dr. Jon Pryor, president of Essentia’s East Market, last week. “If we don’t have the money to pay people to take care of people when we really have a surge, that’s going to be a problem.”

Both health systems are in the midst of redevelopment projects totaling $1 billion over the next several years in Duluth’s medical district.


Officials of both have expressed regrets about cutbacks.

“The decision to refocus our operations for the coming COVID-19 surge is difficult because we deeply appreciate the contributions of all our Essentia colleagues,” said Dr. David Herman, Essentia CEO, in the news release. “We recognize and regret the hardship this uncertainty will have on our co-workers and their families.”

This story was updated at 8:09 p.m. (March 31) with additional background information. It was originally posted at 6:57 p.m. (March 31)

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