The Medical University of South Carolina is making deep cuts to its staff and slicing pay across the board by as much as 20 percent as the state-supported hospital confronted "unprecedented" financial pressure due to the coronavirus pandemic.
Cuts will affect all of MUSC Health's staff. Across its hospitals, university and clinics, MUSC employs more than 17,000. It is laying off a total of about 900 people, the hospital system announced late Monday afternoon.
Leadership will take a 20 percent pay cut. That includes administration and directors. Full-time salaried employees will see a 15 percent pay cut. Meanwhile, some areas of the hospital may close altogether, and staff in those areas will be laid off as a result.
Layoffs will be effective Tuesday at 5 p.m. Salary adjustments take effect one week later. It is describing those layoffs as "temporary."
During a press conference with Gov. Henry McMaster on Monday afternoon, Dr. Pat Cawley, MUSC Health CEO, said layoffs would affect only those who aren't needed during a surge.
"We are not laying off front-line workers," Cawley said.
Some of those front-line health workers have already seen hours reduced due to the coronavirus pandemic. But those workers "will not see any additional pay cuts so that MUSC Health can continue to be prepared to face the public health crisis as it unfolds," the hospital system said in a statement.
Laid-off staff, or those with reduced hours, will be able to file for unemployment, joining the nearly 96,000 residents of the state who have already done so just in the last two weeks. The S.C. Department of Employment and Workforce's system is overwhelmed with calls and applications.
MUSC began the year in a healthy financial position. But as coronavirus cases grew in March, the system, like many hospitals across the country, began to face trouble.
Charles Schulze, chairman of the MUSC board of trustees, said during a Thursday meeting "the worst of this crisis is yet to come."
"We need to keep the enterprise financially viable so we can administer care to those who need it," Schulze said. "It’s not going to be easy. It’s not going to be without making some tough, immediate decisions."
A few days later, staff were hearing of layoffs and pay cuts.
MUSC joins Prisma Health in staff cutbacks. The Midlands and Upstate health system has furloughed employees. Prisma Health also says no front-line staff have been affected. Many MUSC staff were already working under reduced hours, and had to use up their paid time off.
Trident Health and Roper St. Francis are each paying staff for cut hours. But Roper St. Francis is supported by partial owner the Medical Society of South Carolina, and Trident Health is owned by a large, investor-owned company out of state.
"We are encountering unprecedented and serious financial deficits generated by the rapidly evolving COVID-19 crisis," an MUSC spokeswoman said in a statement.
Federal-level support could be coming to MUSC and other hospitals with the passage of the CARES Act on March 27, but how that money will be divided isn't yet clear.
The law included $100 billion set aside for nonprofit hospitals, but "it is unlikely to fully cover" lost revenue from the pandemic, according to a Friday report from Moody's Investor Service. MUSC is a publicly supported nonprofit.
The two main stressors: Hospitals have had to cancel many non-urgent surgeries and other procedures that are moneymakers in normal times, and expenses are rising as hospitals shore up key supplies. MUSC's surgical cases are down 75 percent since it began cutting back, for instance.
MUSC also has a standout amount of long-term debt: $701 million, as of the end of February. That amount has more than doubled since 2016 as the hospital system invested in a new children's hospital, capital projects and renovations. Much of its spending on expansion is financed through the U.S. Department of Housing and Urban Development.
In 2019 alone, MUSC leaders finalized $137 million to buy four hospitals around the state, opened a $16 million outpatient center inside the Citadel Mall in West Ashley and finished work on the $389 million Shawn Jenkins MUSC Children's Hospital.
The four new hospitals were underperforming by February, however, and the West Ashley site has been closed for weeks due to coronavirus. MUSC is delaying spending on capital projects for the time being.
In February, before the first coronavirus cases were reported in South Carolina, MUSC reported a loss. Already, the number of surgeries was down. The system's financial performance in March has not yet been reported.