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Mass. General Brigham cuts executive salaries, freezes pay for others

The state's largest health care network says cost-saving measures will affect 50,000 workers across the company.

Massachusetts General Hospital.
Massachusetts General Hospital.Blake Nissen for the Boston Globe

Mass. General Brigham, the state’s largest network of hospitals and doctors, said Wednesday it would temporarily cut executive compensation and freeze pay for thousands of employees after losing $800 million in revenue during the coronavirus pandemic.

The company, formerly known as Partners HealthCare, also said it would suspend contributions to employee retirement plans.

The measures, which will affect 50,000 employees, are expected to save $500 million for the 12 months, beginning July 1, when they are in place. Layoffs aren’t part of the cost-reduction plans.

Mass. General Brigham is the state’s largest private employer, with 78,000 workers at its 12 hospitals, clinics, doctors practices, and insurance division. When the pandemic hit in mid-March, the company cancelled all nonurgent medical procedures and outpatient programs, which generate the bulk of its revenue. To compensate for lost revenue and rising costs from COVID-19 care it suspended capital projects and imposed a hiring freeze for nonclinical positions.

In May, the company reported an operating loss of $178 million for the fiscal second quarter ended March 31, before the COVID-19 crisis peaked. The loss was its first since the fourth quarter of fiscal 2017.

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“We project we could lose up to $2 billion through the end of the calendar year,” Peter Markell, chief financial officer of Mass. General Brigham, said in an e-mail Wednesday to employees. “It is difficult to know when our financial picture will return to where it was before the pandemic began.”

The state’s hospitals are losing $1.4 billion in revenue each month, the Massachusetts Health & Hospital Association told the Globe in May, and are projected to lose $5 billion in revenue through July. Health and human services providers have cut more than 100,000 jobs, or 15 percent of the labor force, though they are starting to bring back workers as service restrictions are eased.

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Markell’s e-mail laid out the following cost-reduction steps:

  • Compensation for top executives will be cut by 25 percent from July 1 through June 30, 2021. “Senior leaders” will see their pay reduced from 5 percent to 20 percent.
  • Merit increases will be canceled for employees earning $26.50 or more an hour, but will resume July 1, 2021. Employees earning less than $26.50 per hour will continue to be eligible for a merit increase.
  • The company’s contributions to retirement plans for employees making $26.50 an hour or more will be suspended “until further notice.” Markell said the company expects to resume benefits “within 12 months or sooner.”

“The steps outlined above provide our system the best opportunity to avoid significant layoffs or furloughs,” he wrote.

Some of the wage changes may require negotiations with 1199SEIU United Healthcare Workers East, which represents nearly 2,000 workers at seven company sites, including Cooley Dickinson Hospital, B&W Faulkner Hospital, and North Shore Medical Center Salem.

”For our members impacted there is an obligation to negotiate over the wages,” said Marlishia Aho, a spokeswoman for the union.

A Mass. General Brigham spokesman said company executives wouldn’t comment beyond the information sent to workers.

Dr. Peter Slavin, president of Mass. General Hospital, and the Brigham’s president, Dr. Elizabeth Nabel, each received about $2.6 million in total compensation in 2017, the latest year for which data is available.


Larry Edelman can be reached at larry.edelman@globe.com. Follow him on Twitter @GlobeNewsEd.