Statement on OHSU’s financial response to the COVID-19 pandemic

Salary reductions needed to address significant budget shortfalls

April 23, 2020 Portland, Oregon

“Our people are our priority, and their dedication to our mission and the role they have played in managing the COVID-19 pandemic is nothing short of exceptional. It is devastating to be hit with a financial crisis of this magnitude while succeeding at our primary objective of mitigating COVID-19’s impact on the health of Oregonians. I hope that by spreading the financial burden as equitably as possible across the institution, we can keep our people working so we can best serve our mission to improve the health and well-being of all Oregonians.” -- OHSU President Danny Jacobs, M.D., M.P.H., FACS

Background

Oregon Health & Science University is responding to mounting financial challenges amid the COVID-19 pandemic through a multi-pronged approach aimed at preserving our workforce while sustaining the university for the long term, and positioning for success post-recession.

In March, OHSU leadership committed to maintaining a full workforce with full pay and benefits through June 30, regardless of any modification in operations resulting from the pandemic. Additionally, they established a $1 million hardship fund for employees facing extreme adversity resulting from COVID-19. And while this commitment remains, OHSU is left with financial losses that must be addressed.

Facing a projected loss of revenue between $1 billion and $1.4 billion over the next 28 months, university leaders are taking swift and aggressive action to address significant budget shortfalls while avoiding widespread layoffs, including:

Reducing services, supplies and annual capital spending
University-wide salary reductions, effective July 1, 2020

The salary reductions include university executives, with all incentives and merit increases eliminated. Compared with financially stable years, this results in Dr. Jacobs taking a 40% reduction in compensation, for example. Reductions for other executive vice presidents range from 35% to 40%.

To achieve an overall 10% reduction in salary expenses, a formula will be applied to unclassified administrative (non-represented) salaries that results in higher-paid employees taking a larger percentage reduction, and those making less than $50,000 a year taking no reduction at all.

According to OHSU Chief Financial Officer Lawrence Furnstahl, March typically is a strong month from a financial perspective. OHSU operated as normal for the first two weeks of March 2020; however, OHSU experienced a $35 million to $40 million negative decline in earnings during the later weeks, while in modified operations. This serves as an important data point in projecting the loss for a full month of modified operations, Furnstahl says – for April, the decline could be more than $100 million.