Cleveland Clinic cancels raises, faces $500M revenue shortfall

Cleveland Clinic is implementing a cost-reduction plan to offset losses tied to the COVID-19 pandemic, according to cleveland.com

The health system's cost-cutting plan includes delaying some capital projects, restricting travel and eliminating raises. 

"For the first time since the effects of the 2007-09 recession, the Cleveland Clinic has announced that it will not give pay raises in 2020," the system said in a statement to cleveland.com. "Our priority is to preserve jobs and not reduce pay for our caregivers. This does not change or devalue the hard work of our caregivers and the commitment they have shown, especially during the COVID-19 pandemic."

Cleveland Clinic ended the first quarter of this year with an operating loss of $39.9 million, compared to operating income of $36.2 million in the same period a year earlier. Through April, the first full month the health system limited services due to the pandemic, Cleveland Clinic had net patient service revenue shortfalls of more than $500 million, compared to plan, and incurred about $100 million in COVID-19 preparedness costs, according to financial documents

To help offset financial damage, Cleveland Clinic received $199 million in federal grants in April and May combined to cover expenses and lost revenues linked to the pandemic. The health system also applied for and received $849 million in Medicare advance payments, which must be repaid. 

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