Univ. of Iowa Hospitals and Clinics cutting pay but not jobs to offset COVID-19 losses

Univ. of Iowa Hospitals and Clinics cutting pay but not jobs to offset COVID-19 losses
Published: Jun. 23, 2020 at 4:59 PM CDT
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IOWA CITY, Iowa (KCRG) - While individual staff at University of Iowa Hospitals and Clinics will feel the pain of lost pay, hospital administrators are proud to avoid layoffs as it tries to solve a financial crisis from COVID-19.

UIHC announced its plan to cut staffing costs to help make up an expected $100 million financial loss due to the pandemic. That loss is a combination of lost revenue during COVID-19 shutdowns and restrictions as well as added costs for protecting staff and patients.

The plan calls for all staff to take unpaid time off or give up paid vacation time, with higher wage earners bearing a bigger share of the pain. Employees making $50,000 or more will have to take two weeks unpaid furlough or give up 100 hours of PTO. Those making less than $50,000 will have to take a week off unpaid or give up 50 hours of vacation time. Most employees will also still receive a planned 2.1% pay raise starting July 1st. Faculty, executives and administrators will not receive the raise. The hospital CEO and Vice President of Medical Affairs will take an even bigger pay cut, amounting to more than three times the average cut in staff pay.

“Our goal has been, and continues to be, to avoid layoffs and to minimize the impact on employees,” said Suresh Gunasekaran, MBA, CEO of University of Iowa Hospitals & Clinics and associate vice president of UI Health Care. “Several factors, including being able to quickly and safely increase patient volumes, as well as federal stimulus funding, allowed us to develop a much more favorable solution for addressing the financial impact than initially anticipated.”

Gunasekaran said he can’t rule out the idea that more cuts will be needed if the pandemic conditions worsen in Iowa. While he thought that was unlikely a few weeks ago, a recent spike in cases in Johnson County has him concerned that some people are not following social distancing, wearing masks or taking other precautions to limit the spread of COVID-19.

“Until about a week ago I thought the answer was definitively, no, we are not worried about that. But recently, the data out of Johnson County shows an increase over the last couple of days,” Gunasekaran said. “This is not the time to be complacent. We continue to have to follow social distancing, face coverings in all situations for the benefit of the community so we don’t have a widespread infection rate increase.”

Staff also have a one-time opportunity for a one-time cash bonus if the hospital meets financial goals for the rest of the year to recoup some of the lost income of vacation time.

“Given the circumstances, this is a much better scenario than we could have envisioned at this moment in time. We are beginning to see more patients come back in for the care they need, which makes us optimistic about the future. However, there is still a lot of uncertainty – will there be another peak in COVID? Will patient volumes remain high enough?” said Gunasekaran. “We feel confident our plan moving forward will allow us to navigate what may lie ahead.”

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