Mayo Clinic has unveiled a plan to cut $1.4 billion in pay, withdraw nearly $1 billion from its financial reserves and save another $700 million through a hiring freeze to counteract a $3 billion loss inflicted by the coronavirus.
A large portion of this loss was the result of Governor Tim Walz’s ban on non-essential procedures that has cost Mayo up to 75% of its business in some areas.
These changes are expected to last through the end of 2020, and will cut pay for senior managers and doctors by 10% while other groups’ pay is deducted at a slightly higher or lower rate. The top two executives and their direct staff will see a 20% and 15% pay cut respectively while salaried employees will only be docked by 7%.
“We’re going to make some difficult decisions and do it with compassion,” says the hospital system’s chief administrative officer, Jeff Bolton, according to the Post Bulletin. Those who are “least able to absorb pay reductions,” will not see a change in income. Overall, about 1/3 of the Clinic’s 70,000 employees will be directly affected.
In both 2018 and 2019, the Clinic recorded a $700 million operating financial margin, meaning that it has reported this amount in profit. However, in the last week of March alone, Mayo says it lost $162 million, reports the post.
Meanwhile, the Rochester campus is running at about 35% patient capacity and performing only about a quarter of the surgeries it normally would. This is because the majority of the procedures the world famous hospital provides have been forcibly canceled by Walz’s executive order prohibiting non life saving treatments.
The clinic has not experienced a reduction in business this severe since the Great Depression, according to the Post.
Despite tremendous financial losses, Mayo Clinic has maintained its position on the frontlines in the fight against coronavirus. Last month, it developed and deployed its own COVID-19 test, offering free drive up screening for anybody who showed symptoms. Now, Mayo is testing antibodies sampled from recovered patients to develop a cure for the virus.
“There’s enough historical evidence to tell us that, yeah, this will probably work,” Dr. Jill Adamski, chair of laboratory studies at the Mayo Clinic, Arizona says about the new treatment, according to local media.
Members of the Minnesota community have also stepped up to support the hospital in this difficult time. For example, Timberwolves star Karl-Anthony Towns recently pledged $100,000 to the hospital.