Temporary Actions Address the System’s Significant Revenue Loss Driven by COVID-19 Pandemic
June 4, 2020
NEENAH, Wis. – As the COVID-19 pandemic’s far-reaching and severe challenges endure, ThedaCare leaders are announcing a financial stabilization plan to see the organization through this temporary financial situation in a way that protects patient care and positions ThedaCare to emerge as a strong organization that can forge smartly ahead to continue caring for the people of Central and Northeast Wisconsin long into the future.
“As a nation, we have lost more than 100,000 lives, tens of millions of Americans have lost their jobs and virtually everyone is experiencing some form of significant stress or pain in at least some part of their life,” said Imran A. Andrabi, MD, ThedaCare President and CEO. “In this challenging time, ThedaCare, like other health care organizations across the country, must take necessary steps to safeguard our mission and secure our shared future for the health and wellbeing of the communities we serve.”
At the onset of the pandemic, the Center for Disease Control and Prevention (CDC) recommended ThedaCare and health systems across the U.S. temporarily suspend non-urgent elective surgeries and other services to devote all available resources to serve the community as the virus spread. Even as ThedaCare continued safely managing COVID-19 cases while beginning a phased approach to reinstate services in early May, the recommended suspension and the costs associated with COVID-19 preparation resulted in a 40 percent reduction in net revenue in April alone. ThedaCare is not alone as the American Hospital Association estimates $202 billion in losses for U.S. hospitals and health systems in the last four months.
“While we believe that the temporary suspension of these services was the right thing to do at the time, it had a severe impact,” explained Dr. Andrabi. “Prior to understanding what government relief might look like and how long it might be until we would be able to resume suspended services, we were projecting a $150 million loss in 2020. In the weeks since, we have been able to reduce that projected loss by almost half to a projected loss of $70 million. Today, we are sharing our plan – built through collaboration and a steadfast commitment to protecting our mission – to further narrow our projected loss to $30 million for 2020.”
Working together with leaders, clinicians and physicians across the organization, ThedaCare has identified a path forward to stabilize its financial and strategic position today and into the future. Beginning in early June, with additional details to be developed in the following weeks, the health system will execute a Community Commitment and Financial Stabilization plan that keeps services intact, starts with the top level of the organization and works to minimize the impact on frontline team members.
“Unlike hundreds of other health systems around the country, our plan does not include mass layoffs and other measures,” said Dr. Andrabi. “We do not view this as singularly a financial problem. Yes, we have a mission-critical financial challenge that, if left unaddressed, can become a severe threat to our organization. Our real task is to navigate this extremely difficult, but we believe temporary, financial situation in a way that protects the organization from long-term damage and allows us to continue to meet the needs of our communities for decades to come.”
Importantly, the system’s measures do not include changing base salaries for team members beyond specific leadership roles. The following temporary changes are expected to continue through the end of the calendar year and include a change to discretionary retirement contributions and the following specific adjustments to compensation for ThedaCare leadership levels:
Compensation Changes Focus on Leadership Levels
- Dr. Andrabi is taking an approximately 50 percent cut to his total compensation, and members of the executive leadership team are taking a 40 percent reduction in their compensation.
- Other ThedaCare leaders – senior vice presidents, vice presidents, directors, managers, supervisors – and physicians and advanced practice clinicians (APCs) will see a smaller reduction in their compensation for the rest of 2020.
- No ThedaCare leaders will be eligible for incentive compensation for this calendar year.
“As one of the region’s largest health care providers, we understand and take seriously our responsibilities to our team members, patients and communities. We don’t make these decisions lightly, yet we realize that our ability to weather this storm and ensure the stability of our mission requires some short-term sacrifice for the greater good: protecting our ability to care for our communities, while always being steadfastly committed to being a place people are proud to work,” said Dr. Andrabi. “We are taking action to preserve jobs and ensure our ability to continue to safely care for patients and support our team members.”
Patients will continue to have access to ThedaCare’s services, as the system continues to work closely with government officials and follow guidelines from the CDC and state and local departments of health to deliver safe patient care.
“Providing excellent care to our patients continues to be our most important priority,” added Dr. Andrabi. “And while we can’t say for certain what the future will look like, we believe these steps are necessary to navigate the challenges we know about and those that will arise in the months ahead.”
For more information on steps ThedaCare is taking to safely care for patients during this time, visit ThedaCare.org/covid19.
