UW Medicine has been at the forefront of the battle against COVID-19 locally and globally, with an array of efforts that includes creating widely used outbreak models and processing a majority of Washington state’s diagnostic tests.
Its ability to sustain those efforts was thrown into question last week when CEO Dr. Paul Ramsey announced an unprecedented $500 million budget shortfall caused by the very pandemic the Seattle-based health system has been helping combat.
Among the ways Ramsey plans to make up for those losses: staff furloughs. On Monday, UW Medicine officials announced one- to eight-week furloughs for 1,500 professional and classified non-union staff, which includes management and administrative workers. UW Medicine has a workforce of about 30,000 people.
Management and unions will bargain this week over furloughs for unionized staffers and could have an agreement by week’s end, said Lisa Brandenburg, president of UW Medicine Hospitals and Clinics.
Other proposed cost-saving measures include reduced pay for senior leadership, pausing any capital projects that aren’t “mission-critical,” a hiring freeze for any job not associated with patient care, and a halt to all discretionary spending.
While Ramsey’s budget announcement last week mentioned “FTE (full-time employee) reductions,” it isn’t yet clear whether UW Medicine will resort to layoffs. The system pays out about $90 million a month in wages. The furloughs are expected to save $15 million between now and August.
“What we are doing right now is taking these temporary measures to preserve as many jobs as possible,” Brandenburg said.
UW Medicine’s dim financial prospects leave its workers, many of whom are on the front lines against COVID-19, staring down a fate many had never contemplated.
“I never thought we’d experience layoffs in the medical field,” said Tammy Albanese, a neurosonographer at Harborview Medical Center with 31 years of experience in medicine. “We’ve always been desperate for help.”
Albanese, who uses ultrasound to visualize the brain and works in a small laboratory, said her manager last week announced two people would need to be furloughed and sought volunteers within an hour’s time.
“We were stunned,” Albanese said. “We have all really been paying attention to COVID and not the financial picture.”
Albanese, the most junior of her peers, volunteered for furlough before her union, SEIU1199NW, stepped in and demanded UW Medicine stop communicating with its members individually and bargain instead. Several union leaders said they sent “cease and desist” letters to UW Medicine or threatened to file grievances regarding unfair labor practices.
Union members held a short “unity break” demonstration last Thursday to call for better safety measures and protest the furloughs. The event came as UW Medicine is in protracted contract negotiations with the University of Washington Housestaff Association, a union that represents resident physicians, who are pushing for better working conditions, pay and benefits. That bargaining has produced tensions exacerbated by COVID-19 and the strain it has put on health care workers.
The cost-reduction measures sting even more because UW Medicine has cemented itself as a key resource in the world’s fight against SARS-CoV-2, the coronavirus that causes COVID-19.
Its global prominence might be best illustrated by the medical school’s Institute for Health Metrics and Evaluation (IHME), which has about 90 people working on virus modeling for all 50 states and for some European nations, with plans to create models for every county in the United States.
UW Medicine officials wouldn’t say whether they will cease any efforts surrounding COVID-19, or how the system can continue to do what it is doing with fewer people working fewer hours.
However, Ramsey has said some efforts will continue full steam, including:
- Diagnostic and antibody testing in the UW Medicine Virology Laboratory.
- Support of COVID-19 testing for vulnerable populations.
- IHME’s work to make projections that will help guide planning for recovery during the summer and potential resurgence of COVID-19 next fall.
- “Many” active research programs related to vaccine development and potential treatments. (In a Thursday interview, Ramsey did not give more detail on which research programs would continue.)
- Partnership with Public Health – Seattle & King County for the Seattle Coronavirus Assessment Network (SCAN) project. (SCAN was put on hold last week by the U.S. Food and Drug Administration, but a spokesperson said the project hopes to resume testing and notification of results soon.)
- Clinical care for patients with COVID-19.
“Continuing our response to COVID-19 is a perfect fit with our mission to improve health,” Ramsey said. The moves being made now are “intended to stabilize our financial foundation” so that work can continue, he said.
At the heart of UW Medicine’s financial trouble is a loss of revenue — particularly from elective surgeries, which were paused at the height of the surge of COVID-19 patients into the region’s hospitals. Revenue shortfalls account for about $327 million of the estimated losses since March, according to a report given last week to the UW Board of Regents. The regents’ approval of the budget for fiscal year 2021, which begins July 1, has been pushed back to September because of the pandemic.
The system had been doing well financially heading into March, with UW Medical Center about $10 million ahead of budget forecasts. Once the pandemic hit, that picture changed dramatically: UWMC lost more than $50 million in net revenue in April alone.
UW Medicine will try to have some of its losses covered by federal and state programs, including FEMA, the CARES Act and the Medicare advance payment program, Ramsey wrote in a May 11 email obtained by The Seattle Times. It will also pursue philanthropic donations through its Emergency Response Fund, he wrote.
Washington state has allocated $10 million for the testing UW Medicine has done, but that state funding won’t be able to close the gap, especially as the state tackles its own money issues. With preliminary projections estimating a $7 billion shortfall in state revenue through 2023, Gov. Jay Inslee has asked each state agency — including UW — to model a 15% budget cut.
“We will certainly model that, but it will be devastating. It will hurt students. It will lead to an absolutely diminished recovery for the entire state,” UW President Ana Mari Cauce said during a Board of Regents meeting Thursday, adding university leaders would do everything in their power to avoid a cut so deep.
UW Medicine makes up about half the university’s budget. In the context of the state budget, though, UW Medicine is considered independent and self-sustaining.
“For all practical purposes, they look more like a nonprofit hospital than (a state) agency,” said state Sen. John Braun, R-Centralia, who leads budget negotiations for his party. “They can come to the state with a budget request, and they do occasionally.”
In the most recent state budget, lawmakers set aside $37 million for UW Medicine, said Sen. Christine Rolfes, D-Bainbridge Island, a lead budget writer for the Democrats. Both Braun and Rolfes said it’s crucial to keep the institution afloat during the pandemic.
“The state’s economy and our ability to rebuild the economy is very tightly woven with the public health situation and people’s confidence about their safety,” Rolfes said, adding UW Medicine, with research and testing labs, would be critical to the state’s economic recovery.
However, “the thought we can step in with $500 million is not likely,” Rolfes said. “Right now, the whole economy is in need of a rainy-day fund.”
Lawmakers will receive their next official revenue forecast in June and Inslee could call a special session to shore up the state’s finances this summer.
It’s more likely help could come from the federal government. UW Medicine received $29 million from the CARES Act, which Congress passed in March, and $258 million from Medicare. The money covers six months of Medicare claims and has to be paid back within a year.
Whatever UW Medicine does get from the state or Congress won’t be enough to cover its losses. The most important factor will be getting elective procedures and clinical patients back, Ramsey said.
“The largest adverse financial impact comes from the fact we’re not seeing patients we would otherwise be seeing,” he said. “That is also one of the largest unknowns in our projections going forward.”
Elective work is set to slowly begin this week. UW Medicine expects to be doing about 10% of its normal amount of elective work by the end of the month and could be fully operating by September, the system’s chief financial officer, Jacqueline Cabe, told the Board of Regents on Wednesday.
Stories like that of Albanese, the neurosonographer at Harborview, demonstrate how difficult it is to make cuts at a time when every person is needed. She said if two people in her lab are furloughed, that places a burden on the three remaining workers.
“It’s still going to be tight,” she said. “I’m not quite sure how they’re going to handle it besides overtime, which doesn’t make a lick of sense.”