Spectrum Health Addresses COVID-19 Financial Impact
Reduced revenue and increased expenses require cost reductions
GRAND RAPIDS, Mich., April 17, 2020 – Spectrum Health today announced steps it will be taking to respond to the financial impact of COVID-19.
Health systems, including Spectrum Health, rely heavily on clinic appointments, surgeries and procedures to generate revenue. To respond to COVID-19 and in accordance with Governor Whitmer’s executive order, Spectrum Health canceled more than half of all non-emergency and non-urgent surgeries and procedures to prepare for a possible surge of patients. This represented a multimillion dollar reduction in revenue in just one month.
While revenue is decreasing, expenses have increased, reflecting the costs associated with responding to COVID-19. For example, Spectrum Health purchased large quantities of personal protective equipment (PPE) to ensure it could protect its team members and patients, spending more in one month than it would typically spend in one year on these supplies.
While West and Southwest Michigan have yet to experience a patient surge comparable to other parts of the state and country, the impact on Spectrum Health’s finances and operations are dramatic. The health system expects that unemployment and economic pressures will continue to impact people’s ability to pay for health services in the future. The financial impact is far-reaching and will suppress the health system’s revenues for the remainder of the year, making a course correction imperative.
“Our team members have done an outstanding job of rising to the challenges presented by COVID-19, and to help take care of the community we serve. I could not be more proud of our team,” said Tina Freese Decker, President & CEO, Spectrum Health. “None of us would have chosen to be in this COVID-19 storm and experiencing this level of disruption, but we must adapt. We are making very difficult decisions that will reshape our organization going forward. We will maintain our unwavering commitment to high-quality patient care and innovative health insurance products—offering value in ways that matter most to people, such as affordability, convenience and personalization.”
The following temporary actions have been put in place:
- Executive compensation: Tina Freese Decker, President & CEO will take a 40% reduction in pay. Her direct leadership team will take a 30% reduction.
- Executives are donating surplus paid time off (PTO) to the organization’s Compassionate Paid Time Off fund to help team members in need of extra PTO.
- Matching contributions to employee retirement accounts will be stopped from July through December.
- Aggressively reducing expenses and prioritizing what must be done in 2020.
With the accelerated rate of change in the organization’s operations, there will be some positions that will not be needed in the future. These are not roles that care for patients.
“Our job is to act responsibly and lead for the long-term so that Spectrum Health is able to serve our communities for years to come,” said Freese Decker.
Spectrum Health System, a not-for-profit, integrated health system, is committed to improving the health and wellness of our communities. We live our mission every day with 31,000 compassionate professionals, 4,600 medical staff experts, 3,300 committed volunteers and a health plan with more than 1 million members. Our talented physicians and caregivers are privileged to offer a full continuum of care and wellness services to our communities through 14 hospitals, including Helen DeVos Children’s Hospital, 150 ambulatory sites and telehealth offerings. We pursue health care solutions for today and tomorrow that diversify our offerings. Locally-governed and based in Grand Rapids, Michigan, our health system provided $550 million in community benefit in calendar year 2019. Thanks to the generosity of our communities, we received $37 million in philanthropy to support research, academics, innovation and clinical care. Spectrum Health has been recognized as one of the nation’s 15 Top Health Systems by Truven Health Analytics®, part of IBM Watson HealthTM.
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