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Michigan Medicine to lay off workers, delay construction of new hospital

university of michigan hospital
Katie Raymond
Michigan Radio

Michigan Medicine, the University of Michigan's health system, will lay off and furlough about 1,400 full-time employees.

The job cuts are part of a plan, announced today by Michigan Medicine, to address a financial loss of up to $230 million projected for the fiscal year that ends on June 30, 2020. The health system expects the losses to continue into the 2021 fiscal year.

Michigan Medicine says the losses arise from caring for patients during the COVID-19 pandemic and from having to postpone many non-emergency procedures and services.

Layoffs and furloughs are being implemented at a handful of other health systems in Michigan for similar reasons.

The plan includes a hiring freeze at Michigan Medicine that will leave 300 current vacancies unfilled.

Other costs savings announced by Michigan Medicine include suspension of merit increases, tuition reimbursement, and employer retirement match which amounts to 10% of salary.

Marshall  S. Runge, chief executive officer of Michigan Medicine, dean of the U of M Medical School, and executive vice president for Medical Affairs at U of M, will reduce his compensation by 20%, and he has asked his direct reports, department chairs and other senior officials to voluntarily accept 5-15% salary reductions.

Michigan Medicine also announced that all capital projects will be delayed unless they are needed for safety or regulatory compliance or to meet an urgent strategic need. That includes a halt to construction of a new 12-story hospitalin Ann Arbor approved last fall by the U of M Board of Regents. 

The stated goal of these cost-saving measures is to minimize the impact on employees while ensuring high standards of patient care and a strong future for the health system.

"Our economic recovery plan will help us continue to provide hope and healing to our patients and support our clinical, educational and research missions," said Runge in a written statement.

"While we don't take any of these decisions lightly, we believe it is a preferable outcome to broad salary reductions and allows us to preserve as many jobs as possible," Runge said.

Mary Masson, spokesperson for Michigan Medicine, said the health system has about 30,000 employees.

U of M owns Michigan Radio's broadcast license.

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Virginia Gordan has been a part-time reporter at Michigan Radio since fall 2013. She has a general beat covering news topics from across the state.
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