UW Medicine announced today that, like other major health systems across the country, it will experience serious financial challenges from its response to the COVID-19 pandemic.
Based on current forecasts, UW Medicine expects its financial losses will exceed $500 million by the end of the summer. This financial projection reflects substantial lost clinical revenue since the start of the pandemic due to the cancellation of non-emergency and elective procedures and the high cost of treating patients with COVID-19, including diagnostic testing and high use of personal protective equipment (PPE) necessary to safely care for patients.
Dr. Paul Ramsey, UW Medicine CEO, announced a series of steps to increase revenue and reduce expenses to stabilize the financial foundation. In addition to seeking reimbursements under federal and state programs for some of the lost net revenue and costs associated with COVID-19, UW Medicine is gradually resuming a full range of clinical services and designing long-term changes in how it delivers high quality, safe and cost-effective care.
UW Medicine will also take urgent actions to reduce expenses. While the full range of these actions is still being determined, they will include reductions in the salaries for senior leaders, staff furloughs, and tight controls on spending. These expense-saving actions will be implemented across the entire UW Medicine organization, including its three hospitals, clinics, physician practice plan, Airlift Northwest, and the UW School of Medicine. Valley Medical Center has already taken several actions, including furloughs and staffing changes related to low census, while additional expense reduction tactics are being finalized.
“UW Medicine has been at the forefront of the national response to COVID-19 in treating critically ill patients, protecting the health of our workforce and limiting the spread of the disease in our community,” said Dr. Ramsey. “I could not be more proud of our employees and their dedication to our mission of improving health for all people.”
“I sincerely regret that our path to financial stability includes reductions in compensation, but I believe the actions we are taking will support the excellence of the UW Medicine clinical, research, and educational programs. As we develop and implement these measures, we are committed to transparency and will seek input on how we can best support our employees during this challenging time.”
UW Medicine’s leaders will host town halls with faculty and staff to further discuss the recovery plans. They will also assure that the plans are developed and implemented in accordance with UW Medicine’s collective bargaining agreements.