Economic Recovery Plan, Phase 2: A message from Marschall Runge, M.D., Ph.D.

May 5, 2020  //  FOUND IN: Strategy & Leadership

Colleagues,

In the past few months, Michigan Medicine has risen to the many challenges the COVID-19 pandemic has created. This includes all of the tremendous efforts on the front lines, in support roles, and from those working remotely to maintain the safest environment possible for our patients and work force. The collective teamwork and contributions have been nothing short of amazing.

As you know, the COVID-19 pandemic has also created significant financial challenges for Michigan Medicine, and another need that required our community to respond. For the end of FY20, we are projecting a loss of $130 – $230M in the health system and a $80 – $100M negative variance in the medical school. We will continue to experience similar losses in FY21 unless we take immediate actions today.

Last week we introduced the beginning of our Economic Recovery Plan. Today, I’m sharing with you more details of that plan and what to expect for the next 14 months. The plan goal is to achieve savings of $400 million. It is critically important that everyone understands our current situation and what changes will be occurring over the next few months.

There are several updates to the Economic Recovery Plan that reflect new information. Bargained for employees should refer to their contracts regarding the following expense reductions.Leadership Salary Reductions. In total, I will be taking a 20% salary cut to contribute to expense reductions. I have asked my direct reports, chairs, and other leaders to voluntarily take a 5-15% salary reduction as well.

Salary Freeze. There will be no salary increases in FY21, including the elimination of merit pay. Exceptions to this include bargained-for staff, faculty promotions in process, and staff promotions in process or part of a “ladder” track.

Hiring Freeze. Job offers that have already been extended will be honored. Any other exceptions to the hiring freeze will require approval from area’s Executive Vice Dean, or from the Dean in the case of faculty hiring. Positions funded by external grants will likely proceed, with approvals.

Attrition, Furloughs and Reductions in Force (RIF). We have identified 300 open positions that will no longer be filled. We need to reduce our work force by an additional 1,400 FTEs, either through furloughs or RIFs. Leaders within the various departments will be developing individual plans to identify non-critical activities and roles.

Retirement Match. We are suspending the FY21 retirement match for faculty and staff of Michigan Medicine, which includes the U-M Medical School. Some exclusions may apply for those faculty and staff who have multiple appointments.  Employees can continue to contribute up to 5% to their retirement funds.

PTO Sellback. The PTO sellback program, which would have been available in May, will be placed on hold until further notice.

Tuition Reimbursement.  Tuition reimbursement for continuing education will not be provided for FY21. If managerial approval was received before May 1, 2020, tuition may be covered if all requirements are met.

Capital Projects. All projects that are not required for safety or regulatory compliance, including the new inpatient facility, have been paused until further notice.

Emergency Needs Funds. A philanthropic fund to help support employees in need of financial assistance due to the pandemic will be established. Information on how to access this direct financial support will be forthcoming from HR. More information about how to contribute to this fund will be available later today on the Online Giving page.

I know this information is difficult to digest. I have asked the Michigan Medicine leadership team to meet with their teams and departments as soon as possible to discuss these changes and answer any questions you may have. Also, please review the Economic Recovery Plan Phase 2 FAQs document for more information.

In the coming weeks, we will continue to be as thoughtful and intentional in our decision-making to minimize the impact on our work force, and refocus on our missions of patient care, education and research. Thank you for your contributions and for your sacrifices to help us regain financial stability and sustainable operations.

Sincerely,

Marschall S. Runge, M.D., Ph.D.
Dean, University of Michigan Medical School
Executive Vice President for Medical Affairs CEO, Michigan Medicine

RELATED STORIES