OMC is the latest hospital system to announce furloughs, wage cuts

Another local hospital system is announcing major financial losses and staff furloughs as a result of the Covid-19 economic slowdown.

In a media release sent out Monday, Olmsted Medical Center said its hospital and clinic volumes have declined by up to 70 percent since the onset of the Covid-19 pandemic. As a result, the organization is projecting a $25 million loss in revenue between the months of April and June.

According to OMC’s most recent annual report, the hospital’s net operating revenue for the entire 2018 fiscal year was $205 million. 

Starting April 28, OMC’s president and CEO will take a 20 percent salary cut, while senior administrators will take a 15 percent salary cut. Two weeks later, on May 12, larger cutbacks will take effect — physicians, podiatrists, directors, and managers will all take 7.5 percent salary cuts, and other salaried staff will be subject to furloughs or pay reductions.

Tim Weir, CEO of Olmsted Medical Center, said his hospital was still able to meet full payroll for April, but needed to take action before further revenue reductions set in. Initial measures include the temporary closing and consolidation of some patient care locations, a hiring freeze for positions not considered “critical,” and halt to capital purchases and projects.

“Despite our stable financial position, we understand that appropriate fiduciary measures need to be undertaken to ensure our ability to continue to serve our patients when this pandemic abates,” said Weir.

OMC’s announcement follows Mayo Clinic’s decision 10 days prior to institute pay cuts for more than 20,000 workers. Over 150 hospital systems nationwide have instituted some sort of staff or salary cutback as a result of Covid-19 related nosedives in revenue.

It was unclear exactly how many of OMC’s 1,300 employees would be affected by the announced cutbacks, and the hospital added the cuts would not fully cover the budget shortfall expected for 2020. Still, Weir said he was hopeful to have OMC’s entire staff back sooner than later.

“As clinic volumes increase, and as we can resume elective surgeries and procedures, we will ramp back up, and we will need our staff. All employees are important to delivering our mission, and we want to bring them back as soon as possible,” stated Weir.

OMC says it will review the new measures every four weeks. 

Isaac Jahns is a Rochester native and a 2019 graduate of the Missouri School of Journalism. He reports on politics, business and music for Med City Beat.