The University Hospital is cutting 443 administrative jobs – 326 of which are open positions.
The Cleveland-based nonprofit health system says the job change, plus other unspecified job cuts, will cut more than $100 million in annual costs. 117 employees who lost their jobs will receive a severance package. None of the 443 positions involved direct patient care.
The health system did not say what types of administrative positions were affected or when those positions would be eliminated, but employees were notified at least 30 days in advance.
The job cuts come in a difficult year for the system and the industry as a whole. University Hospitals reported a net operating loss of $184.6 million for the first eight months of 2022. One factor behind its loss was the percentage of patients in northeastern Ohio using Medicare and Medicaid on a daily basis. increasing. Refunds from those programs has not kept up with rising care costs. Many health systems have reported major financial losses this year, due to high labor costs and rising material prices.
A UH spokesperson said: “While by many measures UH is financially strong, it is imperative that we take actions now to reverse this downtrend and maintain our ability to invest in the future for its mission”. “This involves re-imagining how we deliver care at a lower cost while working to ensure UH provides high quality care with compassion and remains a place great to work with. Going forward, we have a responsibility to reduce costs by cutting some administrative and service costs to secure our investments in direct patient care. “
Jeff Goldsmith, president of healthcare consulting firm Health Futures, said the University Hospitals decision was part of a trend across the industry, as health systems are already clinically understaffed. are looking for common expenses to save costs.
Health systems are testing to see if they can cut the middle classes of the workforce and still function. Some organizations have as many as seven layers between the patient and the executive, says Goldsmith. Higher corporate overheads are not uncommon at systems that have evolved through mergers, as University Hospitals did.
“Is there more pain in other forms of cost reduction than extending the control of some of those people and removing some of the elite? … I think that’s what’s going on now,” said Goldsmith. “I think it’s unfortunate that you’re at the beginning rather than the middle or the end of this cycle.”
One danger in cutting the middle classes of the workforce, he said, is the removal of the organization’s next potential leaders, which could create problems in the future.
In July, the Washington-based nonprofit Providence Health announced it would cut its leadership team, merging seven regional divisions into three. Additionally, Providence is looking at non-employment options to reduce costs, such as looking at real estate holdings, reducing discretionary spending, and diversifying revenue streams to cut many costs. more cost.
Credit rating agency Fitch Ratings recently downgraded the nonprofit hospital sector to “worsening,” with inflation, high costs and investment losses dragging on industry-wide profits.
