Mayo Clinic is restoring pay and returning furloughed workers this summer as the health system sees a financial rebound after patient volumes plunged because of COVID-19.
Mayo announced in April it would cut pay to more than 20,000 people and seek an unspecified number of furloughs after a 50% revenue hit when elective procedures were halted by COVID-19 preparations. At the time, the clinic projected a loss of $3 billion by year-end if it didn't make changes.
The health system isn't back to its originally planned financial performance, but Mayo said patient volumes reached 85% to 90% of normal by mid-June — a quicker recovery than officials said they expected.
"We are in a much better position than we anticipated, and we're very pleased to be able to restore pay and end furloughs early," said Dr. Gianrico Farrugia, Mayo Clinic chief executive, in a statement.
Mayo Clinic is Minnesota's largest employer. For 2019, Mayo reported revenue of about $13.8 billion and paid expenses of about $12.8 billion, leaving $1.06 billion of income from clinic operations.
Mayo maintained strong financial performance through mid-March, according to a financial statement, but ended the first quarter with a much smaller margin due to a net operating loss for the month of March. That's when Minnesota and other states mandated delays in elective and nonemergency surgeries to conserve supplies for an expected surge of COVID-19 patients.
Pay cuts and furloughs at Mayo Clinic were in keeping with a trend this spring of job actions across the health care sector. The clinic told bondholders in April that cost-cutting moves included temporary salary reductions of 7% to 20% for executive, physician and senior administrators. Mayo also extended furloughs, temporary benefit reductions and a hiring freeze.
Minnesota hospitals were allowed to resume elective and nonemergency procedures starting early May. It has made a big difference for Mayo Clinic's financial performance.
"Because of these positive trends, Mayo Clinic will restore pay to pre COVID-19 levels for all staff except senior leadership in mid-July," the clinic said in a statement. "The pay restoration will be realized in the July paycheck, months sooner than had been anticipated."
Federal programs meant to help hospitals also have aided Mayo's financial performance this spring.
Since April 10, Mayo Clinic has received about $220 million in federal funds from various provisions of the Coronavirus Aid, Relief and Economic Security (CARES) Act, a $2 trillion economic relief package signed into law in late March by President Donald Trump. Mayo also received advance payments for providing patient care through a federal program, the clinic said in a financial statement.
Of the CARES Act funding, Mayo said it is "only retaining those funds that can be directly attributed to the pandemic."