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Michigan Medicine to layoff 1,400 full-time employees, leaders take salary reduction

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Posted at 10:49 AM, May 05, 2020
and last updated 2020-05-05 14:07:10-04

ANN ARBOR, Mich. (WXYZ) — Michigan Medicine has announced an economic recovery plan "to minimize impact on employees and ensures high standards of patient care."

The plan includes a combination of furloughs and layoffs totaling about 1,400 full-time employees as part of "organizational restructuring."

This is in addition to a hiring freeze that will leave 300 current vacancies unfilled, according to the health system.

Michigan Medicine says they are faced with projected financial losses of up to $230 million in the fiscal year ending in June 30, 2020 – and expected to continue into fiscal year 2021.

“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,” said Marschall S. Runge, chief executive officer of Michigan Medicine, dean of the U-M Medical School and executive vice president for Medical Affairs at U-M.

Like many health care organizations that had to suddenly cancel all elective procedures and temporarily suspend many services, Michigan Medicine has begun to experience financial implications from caring for patients during the COVID-19 pandemic.

Leaders across Michigan Medicine will be taking a salary reduction. Runge will reduce his compensation by 20 percent and he has asked his direct reports, department chairs and other leaders to voluntarily reduce their compensation on a scale between 5-15 percent.

Other expense savings include suspension of merit increases, employer retirement match, tuition reimbursement, and reductions to supplies, consulting and discretionary expenses. The organization will also delay capital projects that are not needed for safety or regulatory compliance or meet an urgent strategic need. This includes construction of the new inpatient facility.

“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,” said Runge.

Michigan Medicine has begun safely resuming some clinical services, starting with patients in most critical need of care.

The organization has also established a COVID-19 Employee Emergency Needs Fund and will provide grants for lowest-resourced employees in need of financial assistance as a result of the pandemic.

“The important decisions we are making at this critical juncture of the pandemic are to ensure a strong and more secure future for the health system, the medical school, and our partners and affiliates,” Runge said.

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