The announcement of pending furloughs at two of the state’s largest hospital systems is the latest sign that Minnesota hospitals are suffering financially in the wake of COVID-19.
Mayo Clinic on Friday announced pay cuts and furloughs for some staff beginning later this month, while Allina Health employees in non-patient care and indirect patient care roles are being required to take least one mandatory furlough in one-week increments beginning Sunday. Employees can use PTO or vacation time to cover the time off. Allina employees in direct patient care roles will be asked to participate in a phased approach to training and redeployment.
Allina Health has set up a fund, Caring for Caregiver, for employees who experience financial challenges. The system has received everything from mask donations to food along with financial donations cash.
Mayo Clinic, a world-renown facility based in Rochester, operates several southern Minnesota hospitals, including those in Mankato, New Prague and Waseca. It also operates a system of clinics throughout south central Minnesota and a standalone radiation treatment facility in Northfield. Allina Health’s system includes Abbott Northwestern in Minneapolis as well as Faribault’s District One and Owatonna hospitals and a clinic in Northfield.
In their statements, both Mayo Clinic and Allina Health noted the unprecedented challenges and significant financial pressures brought on by the pandemic, but added that the cost cutting is needed to ensure their overall and long-term sustainability.
“The decision to proactively postpone elective patient care was the right one, but it eliminated the majority of our revenue at the same time we are making critical investments to develop and expand testing, conduct research to stop the pandemic and realign our facilities and care teams to treat COVID-19 patients,” read a statement from Mayo Clinic.
In the statement, Mayo leaders say employees will receive full pay and benefits through April 28, and that temporary furloughs of some staff and salary reductions will be required after that.
Clinic officials have declined to comment further.
On Wednesday, Northfield Hospital and Clinics said its senior staff and directors are taking a 10% pay cut and that some staff will be placed on temporary leaves of absence. The cuts are to manage losses of $1 million a week brought on by COVID-19, NH+C said in a statement. While the changes are expected to be re-evaluated at the end of May, the announcement came before Gov. Tim Walz extended the stay-at-home order through May 4.
As of Friday morning, 57 Minnesotans have died from the virus, the total number of cases statewide stood at 1,336. The death toll nationwide has topped 16,000.
In a Wednesday conference call, Minnesota Hospital Association President and CEO Rahul Koranne said hospitals around the state are in a “dire financial crisis.” Earlier this week, the Minnesota Hospital Association announced hospitals in that state are losing about $31 million per day after eliminating elective surgeries and focusing capacity and supplies on COVID-19 response.
The revenue loss represents a 55% reduction of patient revenue, on average. Smaller hospitals are reporting closer to 70% revenue reductions. The loss is expected to remain consistent over the next 90 days for a $2.8 billion impact.
MHA member hospitals are spending an estimated $13.3 million per day to purchase equipment and supplies and to make physical and technological upgrades that will allow them to handle a surge of coronavirus patients. Over 90 days, those additional expenses are expected to total $1.2 billion.
“The analysis also accounted for offsetting revenues as COVID-19 cases increase,” according to MHA. “With an estimated shortfall from reimbursements, hospitals and health systems will experience over $120 million in uncovered patient-related costs. In total, this will result in approximately a $2.9 billion cash flow loss over the next 90 days.”
As Koranne did earlier in the week, Mayo Clinic lauded the work of health care providers.
“Mayo Clinic staff are doing extraordinary work leading in the response to the COVID-19 pandemic. We are proud of and committed to our staff and our communities as they come together to fight this global health crisis.”
But even that hasn’t been enough to stave off the financial effects of the global pandemic.
“We will work with our teams in the coming weeks to ensure that our staff are supported, that the duration of this disruption is as limited as possible, and that we are ready to ramp up quickly and resume full operations when it is safe to do so.”