UI Health Care reached 7 percent operating margin, one time success sharing payment possible

Due to the financial stress that fell on University of Iowa Hospitals and Clinics because of COVID-19, UIHC implemented a cost-saving program that helped the hospital reach a 7 percent operating margin allowing a one-time payment to its employees who lost compensation during the first year of the pandemic.



The UIHC is seen on Wednesday, April 7, 2021.

Emily Delgado, News Reporter

The University of Iowa Hospitals and Clinics are in a stable enough economic condition as fiscal 2021 ends that it can start to reimburse its employees, who lost compensation during the first year of the pandemic, with one-time payments.

“The University of Iowa Health Care was under significant economic stress, we had finished the single most financially destructive month of our history where we had lost over $30 million in one single month,” Chief Executive Officer and Associate Vice President of UIHC Suresh Gunasekaran said during the July 28 state Board of Regents meeting.

These one-time payments will start in September after the regents unanimously voted to approve them on July 28.

“UI Health Care is pleased to announce that fiscal year 2021 ended in a stable financial position, thanks to the continued commitment of our faculty and staff during this difficult time. To show our appreciation, we will be providing a one-time success-sharing payment to all eligible employees,” a UIHC spokesperson said in a statement to The Daily Iowan. 

Due to the economic stress that UIHC was under, they saw a reduction in services, Gunasekaran said to the regents on July 28. UIHC implemented cost-saving measures to combat this economic stress.

“To mitigate the financial pressures of the pandemic, UI Health Care implemented short-term cost-saving measures from July 2020 to June 2021,” a UIHC spokesperson said in an email to the DI.

One of the short-term cost-saving measures was a 90-day hiring freeze. In addition, in spring 2020 UIHC implemented a program asking employees to take unpaid leave or give back vacation hours.

Throughout Iowa, there have been layoffs in health care systems due to COVID-19 causing financial losses. At Mercy Iowa City, the hospital laid off 29 workers last November.

The Iowa Hospital Association, which UIHC is a part of, released an analysis in June 2020 indicating a similar trend of hospitals laying off employees,  that was seen throughout the state, as a result of financial strain caused by the COVID-19 pandemic.

Throughout the state of Iowa during the COVID-19 pandemic, numerous health care systems were laying off employees, Gunasekaran said to the regents.

“Some of these layoffs were permanent layoffs. Some of these were temporary layoffs, but we knew that something had to be done, but it did not fit our culture, it did not fit our mission, to participate in layoffs,” Gunasekaran said.

Gunasekaran told the regents that UIHC finished the year with a six to seven percent margin, defying the odds. He said the success UIHC had was due to the support of the community and regents.

“At the beginning of the year the success sharing program was predicated on the operating margin of the University of Iowa Hospitals and Clinics, and the highest level of success sharing was if we were to reach the seven percent operating margin,” Gunasekaran told the regents.