University of Vermont Health Network Takes Difficult Steps in Response to Financial Impact of COVID-19
Postponement of non-emergency procedures and appointments due to the pandemic have contributed to a projected fiscal year-end loss estimated to be over $150 million
Burlington, VT – The University of Vermont Health Network today announced sweeping measures to address staggering revenue losses directly related to the response to the COVID-19 pandemic. Like many hospital systems across the country facing similar negative financial forecasts, The UVM Health Network is taking quick action to preserve access to care for the region. With projected network losses for the fiscal year estimated to be $152 million, the UVM Health Network is immediately reducing the base salary of leaders, eliminating employer retirement benefit contributions to leaders, and instituting a hiring freeze at all Network affiliates. These steps are intended to further support expense-saving measures announced in March that eliminated performance based compensation for leaders and physicians during the current fiscal year.
“COVID-19 forced us to completely change how we deliver care in a matter of days. I am immensely proud of our people and their response to this pandemic to provide the best care for our patients,” said John Brumsted, MD, President and CEO of the UVM Health Network. “Now we must confront the harsh financial realities that this situation has had on our organization, which means terribly difficult decisions that have a direct impact on our co-workers and their families. The UVM Health Network is prepared to do whatever it takes to preserve access to the care our communities need and depend on. We will get through this by taking action now to mitigate the long-term impacts of our financial challenges.”
Building upon a first quarter of the current fiscal year where targets were missed by $14.6 million, the UVM Health Network entered into the pandemic with financial challenges, compounding the overall economic impact to the organization. As the COVID-19 pandemic made its way into Vermont and Northern New York, the Network instituted a number of initiatives to reduce the spread of the virus, protect and support our patients and staff, and safeguard our supplies and protective equipment, including:
- Temporary cancellation of non-time-sensitive procedures and appointments since March 17;
- Creation of stand-up COVID-19 units and temporary testing facilities;
- Significant work to increase telehealth services;
- Suspension of collections-related activities on patients’ past-due accounts;
- Issuance of an extra week’s pay for employees earning under $99,000 per year.
The total of these expenses through the end of April 2020 is estimated to be upwards of $20 million, with new costs being added each day. A compounding issue is the steep drop in non-COVID-19 patient care, resulting in less patient service revenue, estimated to be as high as 50%. March 2020 saw a $44 million loss, while forecasted losses for the entire fiscal year for the Network as a whole are estimated to be $152 million, absent any additional action by the Network. This loss is lessened by $37.9 million in federal government funding that has come to the UVM Health Network.
In order to meet the health care needs of our region and to regain our financial footing, together, the UVM Health Network is taking the following actions through September 30, 2020, the end of the fiscal year:
- Freeze on all FY20 capital spending, with a few key patient care-focused exceptions, such as the Epic electronic health records implementation;
- Immediate reductions in base pay for leaders across the Network (about 300 employees of the approximately 14,000-empoyee workforce) – 5% for directors, 10% for vice presidents and above;
- Elimination of employer retirement benefit contributions for leaders (directors and above) across the Network;
- Elimination of performance-based compensation for leaders (directors and above) and physicians across the Network;
- Temporary hiring freeze and reducing the number of backfilled positions;
- Reviewing and reducing non-personnel or patient care-related expenses.
Taken together, these actions are estimated to save approximately $25 million in the current fiscal year. These measures, combined with federal government funding and increases in revenue as patient services come back on line, are key components in our financial recovery. The economic impact of these factors will be continuously reviewed by the Network and its affiliates, and we will take additional actions as needed.
Moving to Greater Financial Strength
The gradual reinstatement of non-time-sensitive procedures and appointments, often referred to as “elective procedures,” in the coming weeks, will help to moderate the financial losses. Depending on capacity, the UVM Health Network may be able to make up some ground. The Network is working now to put all necessary measures in place to ensure the safety of patients, providers and staff, as we bring services back.
Additionally, financial support from state and federal governments is essential to offset the financial toll. We appreciate the government funding received to date, and increases in this support will reduce the extent and/or length of future measures.
“We are fortunate that our public leaders at every level are making bold, tough decisions. Their support and partnership with our Network have been invaluable throughout the pandemic. I am confident that as we begin to open up services and address the financial damage, they will continue to provide the support we and other health care providers need right now and in the months ahead,” Brumsted added.
About The University of Vermont Health Network
The University of Vermont Health Network is an integrated system serving the residents of Vermont and northern New York with a shared mission: working together, we improve people’s lives. The partners are:
- The University of Vermont Medical Center
- The University of Vermont Health Network Medical Group
- The University of Vermont Health Network – Alice Hyde Medical Center
- The University of Vermont Health Network – Central Vermont Medical Center
- The University of Vermont Health Network – Champlain Valley Physicians Hospital
- The University of Vermont Health Network – Elizabethtown Community Hospital
- The University of Vermont Health Network – Porter Medical Center
- The University of Vermont Health Network – Home Health & Hospice
Our 4,000 health care professionals are driven to provide high-quality, cost-efficient care as close to home as possible. Strengthened by our academic connection to the University of Vermont, each of our affiliates remains committed to its local community by providing compassionate, personal care shaped by the latest medical advances and delivered by highly skilled experts.