Financial Impact of COVID-19 Crisis Forces SMH to Furlough Some Staff, Make Other Cost Reductions

Financial Impact of COVID-19 Crisis Forces SMH to Furlough Some Staff, Make Other Cost Reductions

Friday, April 3, 2020

Struggling with a sudden and drastic drop in patient volumes and revenues due to the COVID-19 crisis, Sarasota Memorial Health Care System informed its staff today that it must take immediate steps to reduce costs, including temporary furloughs and reduced hours for some employees, to face the challenges ahead.

“This was an extremely difficult decision, and one that we did not make lightly,” CEO David Verinder said in a letter to employees today. “Staff have gone above and beyond to care for our patients throughout this crisis, even as they have been anxious about the health and well-being of themselves and their families. 

“As the health care safety net for the region, we must do all we can to continue fulfilling that critical role in the weeks ahead and for the long-term.” 

Sarasota Memorial experienced a $16 million reduction in revenue in March. After the cancellation of non-emergent procedures, surgery cases fell by more than 50%, and the number of hospital inpatients fell 30%. Meanwhile, volumes decreased by 45% in SMH’s two Emergency Care Centers, and by 66% at its seven Urgent Care Centers. 

The financial hit is expected to be even greater in April and May. The loss of revenue in March came despite high volumes the first two weeks of the month. The health system has had to redirect funds, resources and equipment to respond to the pandemic, planning for surge needs, purchasing additional supplies, and preparing and staffing an increasing number of isolation rooms throughout the hospital. 
“While we have implemented a hiring freeze for all but mission-critical positions, and reduced staff’s hours in areas that have had to cancel services, COVID-19 still has cost SMH millions of dollars,” Verinder said. “We must take greater action now to sustain our ability to care for the community throughout and after this crisis.”

Other cost cutting measures include temporarily suspending any patient services and projects that are not critical at this time as well as pay cuts for senior leaders.  

SMH department directors will be working through staffing and expense reduction plans in the coming days, while ensuring the hospital continues to meet all patient needs.  

Some employees will be flexed, meaning their hours will be reduced to match declining volumes. Others will be furloughed, or placed on a temporary leave from work. Furloughed staff will keep their positions and be called back to work once the hospital resumes normal operations, or earlier if they are needed during this crisis. 

To help ease the burden, SMH is letting employees who accrue Paid Time Off (PTO) to go into a negative balance up to 80 hours, creating an extra cushion of financial support for flexed and furloughed staff. SMH also will continue to cover the cost of furloughed staff’s benefits for at least 90 days. If PTO hours become depleted, staff can apply for unemployment to help cover lost wages.  

Verinder acknowledged the pain the staffing changes will have on his team and his intention to bring people back to their regular work schedule as soon as possible.
“Once the pandemic abates,” he said, “I am hopeful that we will bounce back quickly, thanks to the reputation, resilience and strength of our team and the support of our community.”