Meadville Medical Center officials announced on Tuesday a furlough affecting more than 200 hospital employees. The furlough takes effect today.
“This was a difficult decision to make, but if we do not take meaningful action immediately, the long term viability of the health system is at risk,” CEO Philip Pandolph said. “I hope this pandemic is short-lived, and we are able to recall everyone back to work with as little disruption as possible.”
The furlough is expected to last through April 5, but a statement from the hospital warned that an extension was possible “should business not return to more routine levels.”
A decrease in the number of patients being treated at the hospital’s facilities and a resulting lack of revenue made the furlough unavoidable, according to Don Rhoten, vice president of consumer engagement.
“The lack of revenue we’re seeing as a result of the decreased volume (of patients) has the potential for serious long-term ramifications,” Rhoten said. “We have to take fast action.”
The decline in patients appears to be an effect of the COVID-19 pandemic, according to hospital officials.
“Much of it could be because people are simply staying away,” Rhoten said. “They’re concerned about coming to hospital.”
The decline in services extends across the hospital system and was significantly larger than expected, Rhoten said.
“If you had asked two weeks ago if we were anticipating a decrease of up to 20 or 30 percent in many of our areas,” he said, “we would not have said that we were anticipating that.”
Approximately 225 to 275 employees will be affected by the furlough, according to Rene Suntay, the hospital’s chief financial officer. The hospital first sought volunteers for the furlough, Suntay said. Most employees affected staffed the various outpatient services that have been discontinued along with elective surgeries during ongoing coronavirus mitigation efforts.
The decreased volume of patients in recent weeks came after what had likely been the most financially successful year during Suntay’s 11 years with the hospital.
“It’s like turning off the faucet completely,” Suntay said. “You had the water running like crazy, you’re doing very well, and then all of a sudden they just shut it off completely.
“This virus really kind of derailed everything,” he said.
The hospital, which Suntay said carries an average of approximately $12 million to $13 million in accounts receivable each month, expects to collect an additional $25 million over the next month or two. Beyond that, it would be forced to rely largely on cash reserves.
“Because of the leadership team here that has built up a strong cash reserve,” Rhoten said, “these actions are to preserve the hospital’s ability (to provide care), but at the same time they’re not a dire action.”
In addition to cutting expenses on labor with the furlough, Suntay said MMC expects to see savings on supplies given the steep decline in patients. Even with the savings, the hospital will lose money due to the lost revenue from outpatient services, which account for 82 percent of the hospital’s revenue, according to Suntay.
The hospital’s financial health would likely enable it to survive for “more than a year” despite the sharp reduction in revenue, according to Suntay.
In addition to elective surgeries, the hospital has closed its pulmonary lab, pulmonary rehab, sleep lab, cardiac rehab, massage therapy, gift shop and lab services at its Liberty Street facility.
Employees affected by the furlough will not receive paychecks but will continue receiving benefits, including health insurance, according to Rhoten.
In addition, Rhoten drew a distinction between the furlough and a layoff, explaining that if patient volumes increase, the hospital could soon bring employees back to work.
Mike Crowley can be reached at 724-6370 or by email at email@example.com.