Michigan Medicine announces layoffs, furloughs and pay cuts as part of economic recovery plan

Tuesday, May 5, 2020 - 2:37pm

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Allison Engkvist/Daily

Michigan Medicine announced an economic recovery plan in order to combat the projected financial losses of $230 million for the fiscal year in a press release Tuesday morning. The losses are due to the sudden cancellation of all elective procedures and temporary suspension of many other services during the COVID-19 pandemic.

According to the statement, about 1,400 full-time employees will be affected by furloughs or layoffs, a hiring freeze will leave 300 vacancies and Michigan Medicine leaders were asked to take a voluntary pay cut between 5 to 15 percent. Also included in the plan is a temporary cancellation of certain programs such as merit increases and tuition reimbursement. In addition, the hospital has delayed projects that are not of urgent need, including the construction of a new $920 million inpatient facility.

This announcement comes two weeks after the University implemented pay cuts and other cost saving regiments as a result of the predicted financial losses. 

Due to the COVID-19 pandemic, Michigan Medicine has had to cancel all elective surgeries and other services in an effort to focus on the critical needs of COVID-19 patients. As a result, Michigan Medicine is facing financial repercussions. 

The organizational restructuring aspect of the proposed plan includes a COVID-19 Employee Emergency Needs Fund, which has been established to support employees in need of financial assistance.

Marschall S. Runge, chief executive officer of Michigan Medicine, said in the press release he will be taking a voluntary compensation reduction of 20 percent. He discussed the importance of making these decisions amid the pandemic in order to ensure a positive future for Michigan Medicine.

“While we are faced with continuing challenges as a result of this pandemic, we know that our collective effort will result in our successfully navigating this crisis and moving forward on a path of strength and sustainability,” Runge said. “While we don’t take any of these decisions lightly, we believe it is a preferable outcome to broad salary reductions and allows us to preserve as many jobs as possible.”

Correction: A previous version of this article stated the financial losses were due to treating patients during the COVID-19 pandemic. The financial losses are actually due to the sudden cancellation of all elective procedures and temporary suspension of many other services during the COVID-19 pandemic.

Daily Staff Reporter Varsha Vedapudi can be reached at varshakv@umich.edu.