UMass Memorial lost up to $70M in March, April

Photo | Grant Welker UMass Memorial Medical Center's University Campus in Worcester

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By Grant Welker

WBJ webinar video

Watch the entire video of the WBJ webinar "From the Front Lines: Health Care Leaders from Central MA" via this link on the WBJ webinar page.

The coronavirus pandemic has been an unprecedented challenge for UMass Memorial Medical Center in Worcester, and not just in terms of caring for hundreds of stricken patients.

The hospital sits in a roughly $75-million deficit, President Michael Gustafson said Thursday, including a loss of $25 million in March when the hospital began shifting its focus of care and $40 million to $45 million in April when cases peaked. Those numbers come despite an initial boost in federal aid Gustafson said isn't nearly enough.

"This will be by far the worst financial year in the history of the system," Gustafson said in a Worcester Business Journal online forum with local healthcare leaders, discussing the front line impact of the pandemic.

Last week, UMass Memorial Health Care President and CEO Eric Dickson committed to avoiding layoffs and furloughs across the whole UMass Memorial system, which employs roughly 13,000 people, the most in Central Massachusetts. Dickson said in late March a sale last summer of a pharmacy management joint venture has given the system a financial lifevest. The $208 million it brought in from that sale wasn't yet invested, leaving the money available for emergency use.

Gustafson said Friday the deficit is in part due to redeploying hundreds of workers from areas such as ambulatory clinics to drive-up testing tents or assisting intensive care providers.

Other healthcare leaders on Thursday's forum said they were fortunate to be part of larger for-profit health networks insulating them from a financial hit. Saint Vincent Hospital in Worcester is part of Dallas-based Tenet Healthcare and Reliant Medical Group is part of Minnesota-based Optum, a branch of UnitedHealth Group. Saint Vincent has said some of its nurses have taken voluntary furloughs.

"Being part of Optum has been extraordinarily helpful," said Dr. Tarek Elsawy, the president and CEO of Reliant Medical Group.

Fallon Health reported last week a slight operating loss of $800,000 in the first quarter of the year on revenue that rose 9% from last year to $441 million. President and CEO Richard Burke said the financial impact was not yet widely seen in the quarter, with many insurance claims from the pandemic only being received more recently.

Burke also predicted a major shift in health insurance ahead, as many who've gotten insurance from their employers have to switch to Medicaid when they're out of work. Medicaid and Medicare reimburse health providers at different rates than private insurance, potentially disrupting budgets in the process.

"There's an expectation of a very large shift," Burke said.