OHSU Warns Of $425 Million In Losses From COVID-19
The Oregon Health & Science University could lose up to $425 million over the next two years if it doesn’t take swift action, OHSU leaders told staff this week.
The “economic implications of COVID-19 are nothing short of devastating,” President Dr. Danny Jacobs and Chief Financial Officer Lawrence Furnstahl said in an internal note. “With the financial markets declining, unemployment (applications) at record highs, and a global recession on the horizon, OHSU, like many other organizations, must position and plan for this economic downturn,” they wrote.
They said that the financial impact on OHSU is likely to be “significant.”
“Without offsetting corrective actions, we currently project a negative financial impact to our university of $200 million to $425 million over a 15 to 24 month period, depending on the length of the pandemic and subsequent recession,” they said.
The state’s success in using social distancing, business and school closures, postponement of non-emergency medical procedures, and other measures to dull the spread of the virus may worsen OHSU’s financial losses because the hospital will be running at a much lower patient volume, the note said.
The comments elaborate on a financial presentation Furnstahl made to OHSU’s board of directors last month as the coronavirus-induced economic crunch was taking hold.
OHSU, a 22,000-employee powerhouse, has promised to keep a “full workforce with full pay and benefits, regardless how and when operations and schedules are modified, through June 30.”
But the picture beyond that is uncertain.
Leaders are working to “design a plan to address the financial uncertainty” and will update staff in coming weeks, Furnstahl and Jacobs wrote.
The monolith is not used to facing red ink.
Year after year the university has grown steadily and racked up ever-increasing profits, salting big chunks of money into an ever-swelling reserve. Finances hit an apex in the fiscal year ended June 30, 2019, with record operating profits of $175 million on operating revenues of $3.2 billion. OHSU leaders had expected the party to continue in the current fiscal year, which ends June 30, with a budgeted operating profit of $145 million on operating revenues of $3.45 billion. But even before the coronavirus hit, expenses were ballooning too fast, and OHSU executives restricted hiring. With the virus-induced economic constriction, OHSU leaders are faced with rapidly declining revenues and a raft of expenses to keep the hospital and related facilities going in order to handle an anticipated influx of COVID-19 patients.
Furnstahl last month told the board of governors he expected OHSU would sustain an operating loss of $38 million a month through the end of June, instead of the monthly operating profit of $11 million forecast before the virus hit. The board approved his recommendation that OHSU secure a $150 million line of credit from US Bank.
OHSU has huge reserves. Prior to the stock market volatility caused by the pandemic, it had about $1.2 billion in cash and investments. In addition, the OHSU Foundation had about $1.1 billion in cash and investments.
You can reach Christian Wihtol at [email protected].
Apr 8 2020