30K Mayo employees to be affected by furloughs, reduced hours

Facing significant declines in revenue, Mayo Clinic says supervisors and managers have started informing staff about temporary furloughs.

In all, approximately 30,000 staff from across Mayo locations will receive reduced hours or some type of furlough, a spokesperson said Wednesday.

The furloughs will begin early next month and will be spread through the rest of the year, with “as many as possible happening through August,” the spokesperson said.

“We do not plan layoffs and will continue to provide health care benefits through this period,” said spokesperson Ginger Plumbo.

The furloughs are part of sweeping spending cuts announced earlier this month. Mayo projects a $3 billion dip in revenue this year due to its decision to defer elective procedures, which drive 60 percent of its revenue.

“As we move through these difficult times, our priority is the safety and care of our patients and staff,” said Plumbo. “We are prepared to serve patients whose needs cannot be deferred or delayed without risk to their wellbeing.”

Mayo Clinic is among many health systems across the country making cuts to offset revenue reductions amid the pandemic. Olmsted Medical Center has also announced spending cuts and furloughs.

Voluntary public disclosure

In addition to the aforementioned savings measures — which include salary reductions, furloughs, and a halt to various projects — the Clinic voluntarily disclosed this week that it will be taking out hundreds of millions of dollars in loans to improve it current liquidity situation.

Mayo said it has already privately secured and closed on a $100 million taxable loan, with plans to close on an additional $300 million in loans in May. The Clinic, according to the public disclosure, has also increased its lines of credit by $200 million to a total of $300 million.

Mayo has also received $150 million in CARES Act federal funding and approximately $900 million in advance Medicare payments.

“The COVID-19 situation and response is rapidly evolving and it is not possible to project with any certainty the financial impact of the COVID-19 pandemic on Mayo Clinic’s financial performance,” reads the narrative, a full copy of which you can find here. “The Clinic does expect the deferral of elective surgeries, procedures, and office visits, combined with restrictions on national and international travel, as well as other changes in response to the COVID-19 pandemic, to have a significant impact on operations in the current quarter and possibly for the remainder of the year.”

Mayo had entered the pandemic in a strong financial position. Last year, for the first time in history, its net operating income topped $1 billion.

As it looks to recover financially, the Clinic said this week it has begun “implementing strategies to restore patient volumes while operating in a COVID-19 environment.” The process is expected to be gradual.

“The intention of the actions that we're taking are temporary,” Jeff Bolton, chief administrative officer at Mayo, said during a recent interview with CNN’s Poppy Harlow. “We're forecasting a recovery in the fourth quarter and expecting next year, if things turn around, as projected, we will be able to return the cutbacks that we've had to implement.”

Sean Baker is a Rochester journalist and the founder of Med City Beat.

Story updated 4.25.20