Postponed elective surgeries cost the medical device maker half its business, and George Floyd's death in Minneapolis hit close to home
When Mike Mahoney first heard about the new coronavirus, in January, it struck him as a scientific curiosity confined to China. By early March, the chief executive of Boston Scientific knew it was a global tsunami that threatened to upend the US economy and crush his Marlborough company.
A homegrown Fortune 500 firm, Boston Scientific sells medical devices used primarily in elective surgeries. Those procedures were halted almost overnight when hospitals pivoted to treating COVID-19 patients. The effect on the company’s core business was swift and staggering: Sales plunged 50 percent.
The company had to slash costs, and do it quickly, but Mahoney wanted to avoid layoffs. So on April 2, Boston Scientific made an extraordinary announcement. It was reducing the wages of many of its 36,000 global employees by 20 percent for three months and halving the base salaries of five key executives for six months. Mahoney would forgo most of his base salary until October.
“It was a very difficult decision to make,” said Mahoney, 55. “I really struggled with that.”
Advertisement
Next month, with elective surgeries resuming in most of the country and sales rebounding, despite coronavirus cases surging in the South and West, Boston Scientific will end the four-day workweek and the corresponding pay cut. Mahoney and other top-ranking employees will continue to receive their smaller paychecks until October. His base salary totaled almost $1.28 million in 2019, although his overall compensation exceeded $15.7 million, including stock and other payments.
Mahoney, in his most detailed public remarks about how he is steering Boston Scientific through its biggest crisis since he became CEO in 2011, said the pandemic hasn’t been the only extraordinary challenge.
With a market value of more than $48 billion and operations on six continents, Boston Scientific has about 9,000 employees in Minnesota. That’s about three times the number it has in Massachusetts. Most Minnesota employees work at two campuses in the Minneapolis suburbs.
Advertisement
In late May, when a Minneapolis police officer knelt on George Floyd’s neck in a harrowing scene captured on video, Floyd’s death and the ensuing riots literally hit close to home. Some workers, he said, live near where Floyd was killed or where fires erupted in the days that followed.
Boston Scientific temporarily put five employees and their families up in hotels and provided grief counseling to workers, a spokeswoman said. Mahoney and other members of the executive committee attended an hour-long Zoom meeting with 350 employees from around the world. Many of the workers belong to an employee resource group called Bridge that seeks to advance the careers of Black staffers. Some said they identified with George Floyd because they or their relatives had been mistreated by police over the years.
Boston Scientific, which has drawn praise for its commitment to diversity, took other steps, as well. The company promised to donate $2.5 million to anti-racism programs and contributed at least $250,000 to the Greater Twin Cities United Way. And it released a statement that not only condemned discrimination but also urged employees to confront such behavior if they see it at work.
“Speak up when you experience or witness intolerance, mistreatment or bias in action,” the executive committee wrote. “No matter what the issue, say something . . . Saying nothing when such instances arise condones the discrimination or micro-aggression.”
Advertisement
Precious Morton, a quality manager at Boston Scientific’s site in Alpharetta, Ga., said the commitment to diversity is genuine.
“It’s definitely more than just talk,” said Morton, 33, who is Black and oversees seven Bridge chapters for employees across the United States.
Either of the challenges — a pandemic-related business meltdown and unrest in a city where many of its employees live ― would have tested a chief executive. Together, said Mahoney, a Chicago native who speaks in measured tones, they created what has “clearly been the most difficult year” since he took the helm almost nine years ago.
Boston Scientific was hardly the only medical device company staggered by the postponement or cancellation of elective procedures. Medtronic, Abbott, and Stryker were also among those whose revenue took a dive.
“This was Armageddon,” Wall Street analyst Vijay Kumar, managing director of Evercore ISI’s health care and technology team, said. “Hospitals stopping procedures was a scenario none of us could have ever fathomed.”
Founded in Watertown in 1979, Boston Scientific makes dozens of products, from coronary stents to endoscopic devices, used by a wide range of medical specialists. About 70 percent of its products, Mahoney said, are for procedures considered “deferrable,” or elective. Because of the pandemic, just about everything that wasn’t an emergency was put on hold at hospitals and clinics across the country.
Mahoney arrived at Boston Scientific from the health care products giant Johnson & Johnson, where he headed the New Jersey company’s medical device and diagnostics group. Boston Scientific had struggled for years, losing business to rivals and facing thousands of lawsuits that alleged it had marketed unsafe surgical mesh used in pelvic repair surgeries. Many of the problems stemmed from the company’s $27.3 billion purchase of a rival device maker, Guidant Corp., a 2006 deal widely derided on Wall Street.
Advertisement
Mahoney earned praise for revitalizing Boston Scientific through savvy corporate acquisitions and the roll-out of new products. The company also publicly set goals for workforce diversity and shared data about whether it was meeting those benchmarks.
In January, when Boston Scientific began tracking the outbreak of COVID-19 in China, where the company has operations, “nobody expected it to leave” that country, Mahoney recalled during a telephone interview last week. “We said to ourselves, if this ever comes to the US or Europe, it’s going to be very difficult.”
By early March, after cases began spreading in the United States, there was no doubt that the mushrooming health crisis was also a business crisis for Boston Scientific. On March 18, the Centers for Medicare & Medicaid Services announced that all elective surgeries and nonessential medical procedures should be postponed to preserve hospital beds and equipment for coronavirus patients.
Around the same time, Boston Scientific canceled all travel by employees and then directed most of them to work from home. Some, including hundreds of employees who ship products from a distribution center in Quincy, continued to work onsite, but shifts were staggered to limit the number of people in the building.
Advertisement
Then came the pay cuts. Boston Scientific put most of its full-time US workers who aren’t involved in sales or manufacturing on a four-day workweek. Hours for part-time employees were maintained at a level to preserve benefits. The company enacted similar cost-cutting measures abroad. Boston Scientific has about 17,000 workers in the United States and 19,000 overseas.
The board of directors also decided that each director’s annual cash retainer would be halved for the year, according to documents filed with the Securities and Exchange Commission.
Kumar, the Wall Street analyst, said Mahoney made the right move by cutting pay rather than eliminating jobs.
“If I was a Boston [Scientific] employee and I was told I was going to get a 20 percent pay cut, I might be breathing a sigh of relief,” he said. “Look at the unemployment right now. And by the way, I have a CEO who says he’s going to forgo his salary. That’s management saying, ‘We feel your pain.‘ “
As coronavirus cases have fallen in recent weeks in much of the country and elective surgeries have resumed, Boston Scientific has begun to slowly let employees ― particularly lab scientists ― return to work sites. Nonetheless, company executives know that cases are on the rise in parts of the country and that the crisis is hardly over.
At its sprawling headquarters in Marlborough, about 10 percent of the workforce is back. But the cafeteria remains dark, and water fountains are taped over. Employees and visitors must have their temperatures taken by a heat-sensing camera in the lobby. If it’s below 100.4 degrees, they can proceed.
Mahoney, who spent 90 days working from his home in a Providence suburb, said he’s delighted that employees are returning. Sales have rebounded, and — with many patients who postponed surgeries rescheduling them for later this year ― he expects the company to make more money in the fourth quarter than it did in the last quarter of 2019.
“We knew the business would eventually come back,” he said.
“
Jonathan Saltzman can be reached at jonathan.saltzman@globe.com
"difficult" - Google News
June 29, 2020 at 02:59AM
https://ift.tt/31oyLGI
For Boston Scientific, a ‘most difficult year’ - The Boston Globe
"difficult" - Google News
https://ift.tt/2VWzYBO
https://ift.tt/3d5eskc
Bagikan Berita Ini
0 Response to "For Boston Scientific, a ‘most difficult year’ - The Boston Globe"
Post a Comment