Amid "some of the worst" margins since the beginning of the pandemic, many hospitals and health systems around the United States have been forced to lay off workers, limit services, and even shut down, Dave Muoio writes for Fierce Healthcare.

Background

In 2022, providers were forced to hire contract workers to address the nursing shortage, paying much higher rates than those before the pandemic.

While those costs seem to be growing more stable each month, "many hospitals' depleted budgets are now having to contend with economywide wage and supply cost increases at a time when high-profit volumes (such as surgeries) are still recovering from pandemic disruptions," Muoio writes.

According to Kaufman Hall's National Hospital Flash Report, hospitals in July experienced "some of the worst margins" since the beginning of the pandemic—especially since they can "no longer count on supplemental federal funding to buffer these mounting losses, as they did in previous pandemic years."

Having negative operating margins this far into the year, as well as margins being down 73% year-over-year is "very, very troubling," said Erik Swanson, SVP of data and analytics at Kaufman Hall. "It's really quite stark."

Notably, experts have warned that hospitals will continue struggling with finances and labor supply shortages at least through the end of the year, potentially extending into 2023.

As a result of these financial losses, many hospitals have had to make the difficult decision to either cut back or entirely eliminate some services.

"The result is seemingly contrary to industry trends: a ramp-up of workforce recruitment and retention investments countered by service limitations and layoffs hospitals say are needed to keep the lights on," Muoio writes.

23 organizations lay off workers to cut costs

While some hospital layoffs have been the result of facility closures, others have been coupled with a promise to help some employees transition to other roles within the health system.

According to Muoio, many health systems are "trimming down administrative or leadership positions as they work to plug holes among their clinical workforces."

For example, Adventist Health in early August announced that it had eliminated 52 positions at its headquarters over the previous month. According to the health system, the layoffs included directors, managers, and staffing coordinators, and they were encouraged to apply to one of 2,000 open positions within the organization.

Meanwhile, Albany Medical Center on Sept. 14 informed staff of a "painful" restructure that would include the termination of 37 positions, primarily among management and nonclinical roles.

BHSH System on Sept. 9 announced that it had made the "difficult decision" to lay off 400 of its 64,000-person workforce, citing inflation and the end of Covid-19 relief payments.

Bozeman Health Deaconess in early August cut 28 leadership and leadership support staff positions and closed 25 job openings, citing pandemic-induced economic challenges.

In June, Bristol Hospital laid off 10 managers, closed 21 job openings, and had executives take a voluntary 8% pay cut for 2022.

Commonwealth Health announced that it will close its First Hospital psychiatric center and other outpatient locations at the end of October—a move that will result in the termination of 245 employees.

On Sept. 23, East Carolina University Health will start the process of laying off 61 employees following the closure of its Covid-19 testing sites over the summer.

According to a notice filed with New York, Garnet Health on Nov. 9 will close five outpatient sites, which will result in 29 layoffs.

While Memorial Hospital at Gulfport said it currently has no additional layoffs planned, the organization laid off its VP of system development and CMO in April.

Noble Health's furlough of 181 employees in its Audrain Community Hospital and Callaway Community Hospital will likely become permanent because the hospitals' new owner, Platinum Team Management, has not been able to reopen the facilities.

In July, NorthBay Health reduced its workforce by roughly 7%, with a 20% reduction in senior management positions alone.

Notably, OhioHealth in July began its largest-ever wave of layoffs, with plans to eliminate 637 jobs in the coming months. Among those, 567 were in IT roles, which will remain on the payroll until Jan. 3. The remaining layoffs came from the revenue cycle department and will be laid off Nov. 4. According to OhioHealth, the layoffs were not spurred by cost savings. However, the system said it plans to rely on third-party vendors for both functions.

Penn Highlands Connellsville Hospital in July announced that 27 layoffs and 20 eliminations through retirement and attrition would occur as part of a restructuring of 47 roles.

In its quarterly earnings report, ProMedica disclosed around 150 layoffs among nonclinical staff—a move that followed a $281 million operating loss during the first half of the year.

In July, Providence announced it was reorganizing to create a "leaner" operating model with larger regional divisions and fewer executives. While the health system did not disclose how many leadership roles were eliminated, it said it plans to continue aggressively recruiting for open clinical roles.

In April, Shriners Hospital for Children laid off 38 workers, before laying off 20 more at the end of September, in preparation for the closure of a facility operating on the University of South Florida's campus.

In May, St. Charles Health System announced 105 layoffs and closed 76 job openings, with the health system's CEO citing expense increases, reduced surgery volumes, and relief paybacks that will lead the organization to "likely end 2022 in the red," adding that the reductions were necessary "to ensure the long-term financial stability of the health system." 

In a Sept. 14 notice, St. Vincent Charity Medical Center announced its transition from an acute care hospital to an ambulatory health services center—a move that will eliminate 978 positions, effective Nov. 15. 

At Trinity Health at Home, 60 terminations went into effect Sept. 5. When Trinity Health Mid-Atlantic closed its Mercy Senior Health Center, 14 people were laid off. In addition, Trinity Health of New England's Mercy Medical Center in May announced that 12 of its 380 nurses had been laid off, along with some ancillary staff.

Late last month, UNC Health Rockingham filed a notice disclosing plans to lay off 67 of its 749 employees, effective Oct. 31. The layoffs are the result of a change in vendor contracts.

In September, Yale New Haven Health laid off 72 junior and senior management employees and closed 83 job openings. Those fired were encouraged to apply for other jobs at the seven-hospital system. (Muoio, Fierce Healthcare, 9/23)