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June 16, 2020

Tower Health cutting 1,000 jobs, citing $212 million drop in revenue from the coronavirus

The losses were in part related to restrictions prohibiting hospitals from performing elective procedures during the COVID-19 pandemic

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Tower Health layoffs Screenshot/Google Street View

Tower Health announced Tuesday plans to cut 1,000 jobs. The Reading-based health system said the company expects to save $230 million by reducing its staff and clinical services.

Tower Health, owner of Chestnut Hill Hospital and five other hospitals in the Philadelphia suburbs, has slashed 1,000 jobs after reporting a $212 million drop in revenue due to the coronavirus pandemic, the company announced Tuesday. 

Approximately 900 employees will be affected by the layoffs. The remaining 10% of jobs to be eliminated currently are unfilled positions.

The Reading-based health care system said that, in addition to the revenue loss, there has been increased spending for COVID-19 supplies and services.

"While we excelled in caring for the community during the height of the pandemic, and continue to do so today, the government-mandated closure of many outpatient facilities and the suspension of elective procedures caused a 40 percent drop in system revenue," Clint Matthews, CEO and President of Tower Health, said in a statement. "At the same time, our spending increased for personal protective equipment, staff support, and COVID-related equipment needs."

In April, Tower Health furloughed 1,000 full-time employees in support, administrative and technical jobs after halting elective procedures led to a 40-50% decline in revenue. The company did not say if the furloughed employees now face being laid off. 

Elective procedures at all Pennsylvania hospitals were suspended in March as the coronavirus pandemic spread. The Pennsylvania Department of Health prohibited elective surgeries in order to mitigate the spread of COVID-19 and to ensure health systems had the staffing needed to combat the outbreak. State officials lifted the restriction in late April. 

The health system also will reduce its clinical facilities and services. Pottstown Hospital's maternity ward will completely shut down. Two physician practices, as well as certain services available through Reading Birth Center and Reading Hospital – among them select behavioral services, occupational medicine, and sports medicine programs – will either be consolidated or eliminated.

Employees impacted by the layoffs will receive severance packages and job placements within and outside the health system.

"The decision to reduce our workforce has been difficult and painful, because it impacts lives," Matthews said. "It is necessary, however, to ensure that Tower Health can continue to serve the community with high-quality healthcare in the months and years ahead."

The company expects the layoffs will save approximately $230 million over the next two years, Matthews said. 

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