Children’s Mercy Announces Actions to Stem Financial Fall-out from COVID-19
Actions include executive pay cuts; employee furloughs
KANSAS CITY, MO, April 23, 2020 – Children’s Mercy Kansas City, the region’s only non-profit pediatric health system, today announced proactive steps it is taking to counter the serious financial impact of COVID-19 on the organization.
“COVID-19 is having a crushing, negative impact on patient care access, our employees and our financial performance,” said Paul Kempinski, MS, FACHE, president and chief executive officer of Children’s Mercy. “In order to keep our community safe and to prepare to care for COVID-19 patients, last month we suspended elective procedures and limited outpatient clinic visits.”
As a result, the hospital’s surgeries and outpatient visits are down by more than 70 percent. Its urgent care and emergency departments are down by 67 percent and 57 percent, respectively, and hospital admissions are down 32 percent. Yet, the hospital has cared for only four cases of COVID-19 thus far.
“The number of children impacted by COVID-19, thankfully, has been extremely low compared to the adult population,” Kempinski pointed out.
These declines in patient care volumes have resulted in a decrease in net revenue of approximately $1 million per day.
Pediatric hospitals, including Children’s Mercy, were left out of the federal government’s first $30 billion stimulus payment to hospitals and health care providers. Those payments were based on each hospital’s Medicare billings. Since Medicare is for people 65 years and older, children’s hospitals were excluded, as they are reliant upon Medicaid for much of their funding. Kempinski said he hopes that may change with the bill passed earlier this week by Congress, but he noted that the specific amounts, timing and method of allocation are yet unclear.
With fewer patients to see and stay-at-home orders in place, more than 2,500 Children’s Mercy employees have been working from home. Another 350 employees are at home and not working or are working reduced hours. The hospital has temporarily redeployed about 150 employees into new roles, such as employee COVID-19 screenings, in an effort to keep as many employees working as possible.
In the past several weeks, the hospital has taken several actions to mitigate the financial impact from the pandemic, including:
- Eliminating more than 200 vacant positions;
- Suspending most capital spending;
- Reviewing all discretionary spending, including contracts; and
- Advocating for support of children’s hospitals at every level: county, city, state and federal.
Despite these efforts, a significant and growing financial gap remains.
“To address the growing financial shortfall caused by the pandemic, more steps are needed,” Kempinski said today. “More than half our cost to operate the hospital (60 percent) is in our people, our greatest and most valued resource. From the start of this crisis, it has been our intent to protect our employees, while fulfilling our mission and ensuring Children’s Mercy will be here for generations to come.
“After careful analysis, thoughtful deliberations and intense soul-searching, we have decided to take additional steps.” Those steps are:
- Announcing that senior leadership will forfeit a portion of their compensation for Fiscal Year 2020 ranging from 20% for vice presidents to 30% for the CEO. A portion of this will be redirected to the Emergency Response Fund for employees and patient families in need.
- Furloughing 575 employees for up to 60 days, beginning April 26.
Kempinski explained that, for many employees who currently are not working or working reduced hours, being furloughed allows these individuals to file for unemployment benefits (which are now enhanced by federal stimulus measures). Additionally, while furloughed, Children’s Mercy will pay the employees’ premiums for medical and dental coverage.
Furloughed employees will continue to have full access to all of CM’s health and wellness offerings, including access to the Employee Wellness Center and pharmacy.
“We are hopeful that once the pandemic abates and the stay-at-home orders are lifted, we will be able to ramp back up to normal activity and continue caring for the patients and families of our region,” Kempinski said.
Children’s Mercy joins hundreds of hospitals nationwide that also have furloughed workers as a result of COVID-19, including Washington University School of Medicine (St. Louis), CoxHealth (Springfield), Lurie Children’s Hospital (Chicago), Tenet Health Care (Detroit) and Mayo Clinic (Rochester).
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Learn more COVID-19 information from Children's Mercy