Category Archives: Operating Margin

78 hospitals, health systems cutting jobs

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https://www.beckershospitalreview.com/finance/17-hospitals-health-systems-cutting-jobs-february-2023.html?origin=BHRSUN&utm_source=BHRSUN&utm_medium=email&utm_content=newsletter&oly_enc_id=2893H2397267F7G

A number of hospitals and health systems are trimming their workforces or jobs due to financial and operational challenges. 

Below are workforce reduction efforts or job eliminations that were announced within the past year and/or take effect later in 2023. 

Editor’s Note: This webpage was updated Aug. 10 and will continue to be updated. Stories are listed under the month they were reported on by Becker’s.

August

The University of Arkansas for Medical Sciences is laying off 51 workers in support services, administration and service lines. Some previously open positions will also be left vacant, the Little Rock-based institution told the Becker’s in a prepared statement. Some job duties will be reassigned. 

Springfield, Ill.-based Memorial Health is laying off hundreds of employees, including 20 percent of leadership positions. Affected employees represent 5 percent of Memorial’s total salary and benefits, according to a statement provided to Becker’s. The cuts focused on system leadership, administrative and support sectors.

Boone Health, a county-owned system based in Columbia, Mo., will cut 62 jobs, most of which are unfilled. Fifteen of the 62 positions are held by existing employees.

The in-home care arm of Syracuse, N.Y.-based St. Joseph’s Health, part of Livonia, Mich.-based Trinity Health, is closing in October, pending the discharge of all patients. The closure includes the termination of 71 employees. Mark McPherson, president and CEO of Trinity Health At Home, said 63 full and part-time positions are being eliminated, while the remaining eight were contingent positions.

July

Chapel Hill, N.C.-based UNC Health will lay off 246 employees. The reduction will occur after the organization ends services at a behavioral health facility in Raleigh on Sept. 30, according to a WARN notice filed July 21 with the North Carolina Department of Commerce. 

Philadelphia-based Jefferson Health is reducing its workforce by about 400 positions. The reduction represents approximately 1 percent of the workforce.

Tupelo-based North Mississippi Health Services is moving forward with layoffs and job reassignments as part of its “redesign” plan to improve the organization’s financial picture, according to a message sent to NMHS employees and affiliated providers July 19. NMHS did not provide the number of affected positions or types of positions affected. 

Allina Health began layoffs affecting about 350 team members throughout the Minneapolis-based organization. The health system said the layoffs began July 17 and that most of the affected jobs are leadership and non-direct caregiving roles.  

Middletown, N.Y.-based Garnet Health laid off 49 employees, including 25 leaders. The reductions represent 1.13 percent of the organization’s total workforce.

June

Coral Gables-based Baptist Health South Florida is offering its executives at the director level and above a “one-time opportunity” to apply for voluntary separation, according to a June 29 Miami Herald report. Decisions on buyout applications will be made during the summer.

MultiCare Health System, a 12-hospital organization based in Tacoma, Wash., will lay off 229 employees, or about 1 percent of its 23,000 staff members, including about two dozen leaders, as part of cost-cutting efforts, the health system said June 29. The layoffs primarily affect support departments, such as marketing, IT and finance.

Greensburg, Pa.-based Independence Health System laid off 53 employees and has cut 226 positions — including resignations, retirements and elimination of vacant positions — since January, The Butler Eagle reported June 28. The 226 reductions began at the executive level, with 13 manager positions terminated in March. 

Billings (Mont.) Clinic will lay off workers as part of a restructuring plan to address financial and operational headwinds in today’s healthcare environment, the organization confirmed. The layoffs are expected to affect approximately 27 or fewer positions. 

Melbourne, Fla.-based Health First is eliminating some positions and leaving open ones vacant, Florida Today reported June 21. Seventeen jobs will be cut and 36 will be left unfilled, according to Paula Just, the health system’s chief experience officer. 

Pittsburgh-based Highmark Health laid off 118 employees on June 21, including two from  Allegheny Health Network, a spokesperson for the health system told Becker’s. The layoffs follow the health system’s cutbacks in March and April, according to the Pittsburgh Business Times. Highmark laid off 141 workers earlier this year.

Vibra Hospital of Western Massachusetts, a long-term-acute care hospital in Springfield, will lay off 87 employees by Aug. 15 ahead of the facility’s planned closure. About 30 patients will be relocated to Baystate Health’s Valley Springs Behavioral Health Hospital in Holyoke, Mass., which will open in August.

Cortez, Colo.-based Southwest Memorial Hospital laid off nine people to help ensure the hospital is staffed appropriately, and create financial stability for the future, a spokesperson confirmed to Becker’s. The spokesperson, Chuck Krupa, said the layoffs occurred June 14 and included administrative workers. No bedside care positions were affected. 

Henry Mayo Newhall Hospital in Valencia, Calif., is making “a little over 100” layoffs amid financial challenges, spokesperson Patrick Moody confirmed to Becker’s. Mr. Moody said the layoffs affect workers “in a wide range of hospital departments.” This includes some management-level employees. The hospital, which has about 1,800 employees total, is not providing specific numbers for specific job titles or departments.

Dartmouth Health is laying off 75 workers and eliminating 100 job vacancies. The layoffs came after the Lebanon, N.H.-based health system implemented a performance improvement plan in November. 

Seattle Children’s is eliminating 135 leader roles, citing financial challenges. The management restructuring and reduction affects 1.5 percent of employees across the organization.

White Rock (Texas) Medical Center laid off 30 workers across 28 departments. The layoffs include clinical and administrative roles. 

Jackson, Miss.-based St. Dominic Health Services is laying off 157 workers and ending behavioral health services. The reduction represents 5.5 percent of the hospital’s workforce.

Danville, Pa.-based Geisinger laid off 47 employees from its IT department. The reduction is part of a restructuring plan to offset high labor and supply costs.

Cascade Behavioral Health Hospital in Tukwila, Wash., is winding down operations and laying off 288 employees. The 137-bed psychiatric facility is slated to close by July 31.

Cambridge (Mass.) Health Alliance is laying off 69 employees, reducing the hours of 15 others and eliminating 170 open positions, according to The Boston Globe. The reductions are primarily in management, administrative and support areas, a health system spokesperson told Becker’s. 

May

Wenatchee, Wash.-based Confluence Health has eliminated its chief operating officer amid restructuring efforts and financial pressures, the health system confirmed to Becker’s May 16.

Conemaugh Memorial Medical Center, a Duke LifePoint hospital in Johnstown, Pa., has laid off less than 1 percent of its workforce, the hospital confirmed to Becker’s May 15.  

Community Health Network, a nonprofit health system based in Indianapolis, plans to cut an unspecified number of jobs as it restructures its workforce and makes organizational changes. The health system confirmed the job cuts in a statement shared with Becker’s on May 11. It did not say how many jobs would be cut or which positions would be affected. 

New Orleans-based Ochsner Health eliminated 770 positions, or about 2 percent of its workforce, on May 11. This is the largest layoff to date for the health system. 

Cedars-Sinai Medical Center eliminated the positions of 131 employees and cut about two dozen other jobs at related Cedars-Sinai facilities, a spokesperson confirmed via a statement shared with Becker’s May 7. The Los Angeles-based organization said reductions represent less than 1 percent of the workforce and apply to management and non-management roles primarily in non-patient care jobs.

Rochester (N.Y.) Regional Health is eliminating about 60 positions. A statement from RRH said the changes affect less than one-half percent of the system population, mostly in nonclinical and management positions.

Memorial Health System laid off fewer than 90 people, or less than 2 percent of its workforce.The Gulfport, Miss.-based health system said May 2 that most of the affected positions are nonclinical or management roles, and the majority do not involve direct patient care. 

Monument Health laid off at least 80 employees, or about 2 percent of its workforce. The Rapid City, S.D.-based system said positions are primarily corporate service roles and will not affect patient services. Unfilled corporate service positions were also eliminated. 

April

Habersham Medical Center in Demorest, Ga., laid off four executives. The layoffs are part of cost-cutting measures before the hospital joins Gainesville-based Northeast Georgia Health System in July, nowhaberbasham.com reported April 27. 

Scripps Health is eliminating 70 administrative roles, according to WARN documents filed by the San Diego-based health system in March. The layoffs take effect May 8 and affect corporate positions in San Diego and La Jolla, Calif.

Trinity Health Mid-Atlantic, part of Livonia, Mich.-based Trinity Health, eliminated fewer than 40 positions, a spokesperson confirmed to Becker’s April 24. The layoffs represent 0.5 percent of the health system’s approximately 7,000-person workforce.

PeaceHealth eliminated 251 caregiver roles across multiple locations. The Vancouver, Wash.-based health system said affected roles include 121 from Shared Services, which supports its 16,000 caregivers in Washington, Oregon and Alaska.

Toledo, Ohio-based ProMedica plans to lay off 26 skilled nursing support staff. The layoffs, effective in June, affect 20 employees who work remotely across the U.S, and six who work at the ProMedica Summit Center in Toledo, according to a Worker Adjustment and Retraining Notification filed April 18. Most affected positions support sales, marketing and administrative functions for the skilled nursing facilities, Promecia told Becker’s.

Northern Inyo Healthcare District, which operates a 25-bed critical access hospital in Bishop, Calif., anticipates eliminating about 15 positions, or less than 4 percent of its 460-member workforce, by April 21, a spokesperson confirmed to Becker’s. The layoffs include nonclinical roles within support and administration, according to a news release. No further details were provided about specific positions affected. 

West Reading, Pa.-based Tower Health is eliminating 100 full-time equivalent positions. The move will affect 45 individuals, according to an April 13 news release the health system shared with Becker’s. The other 55 positions are either recently vacated or involve individuals who plan to retire in the coming weeks and months.

Grand Forks, N.D.-based Altru Health is trimming its executive team as its new hospital project moves forward. The health system is trimming its executive team from nine to six and incentivizing 34 other employees to take early retirement.

Tacoma, Wash.-based Virginia Mason Franciscan Health laid off nearly 400 employees, most of whom are in non-patient-facing roles. The job cuts affected less than 2 percent of the health system’s 19,000-plus workforce.

Katherine Shaw Bethea Hospital in Dixon, Ill., will lay off 20 employees, citing financial headwinds affecting health organizations across the U.S. It will also leave other positions unfilled to reduce expenses amid rising labor and supply costs and reductions in payments by insurance plans. Affected employees largely work in administrative support areas and not direct patient care.

Danbury, Conn.-based Nuvance Health will close a 100-bed rehabilitation facility in Rhinebeck, N.Y., resulting in 102 layoffs. The layoffs are effective April 12, according to the Daily Freeman.

March

Charleston, S.C.-based MUSC Health University Medical Center laid off an unspecified number of employees from its Midlands hospitals in the Columbia, S.C. area. Division President Terry Gunn also resigned after the facilities missed budget expectations by $40 million in the first six months of the fiscal year, The Post and Courier reported March 30. 

Winston-Salem, N.C.-based Novant Health laid off about 50 workers, including C-level executives, the health system confirmed to Becker’s March 29. The layoffs affected Jesse Cureton, the health system’s executive vice president and chief consumer officer since 2013; Angela Yochem, its executive vice president and chief transformation and digital officer since 2020; and Paula Dean Kranz, vice president of innovation enablement and executive director of the Novant Health Innovation Labs. 

Penn Medicine Lancaster (Pa.) General Health eliminated fewer than 65 jobs, or less than 1 percent of its workforce of about 9,700, the health system confirmed to Becker’s March 30. The layoffs include support, administrative and executive roles, and COVID-19-related support staff, spokesperson John Lines said, according to lancasteronline.com. Mr. Lines did not provide a specific number of affected workers.

McLaren St. Luke’s Hospital in Maumee, Ohio, will lay off 743 workers, including 239 registered nurses, when it permanently closes this spring. Other affected roles include physical therapists, radiology technicians, respiratory therapists, pharmacists and pharmacy support staff, and nursing assistants. The hospital’s COO is also affected, and a spokesperson for McLaren Health Care told Becker’s other senior leadership roles are also affected.

Bellevue, Wash.-based Overlake Medical Center and Clinics laid off administrative staff, the health system confirmed to the Puget Sound Business Journal. The layoffs, which occurred earlier this year, included 30 workers across Overlake’s human resources, information technology and finance departments, a spokesperson said, according to the publication. This represents about 6 percent of the organization’s administrative workforce. Overlake’s website says it employs more than 3,000 people total.

Columbia-based University of Missouri Health Care is eliminating five hospital leadership positions across the organization, spokesperson Eric Maze confirmed to Becker’s March 20. Mr. Maze did not specify which roles are being eliminated saying that the organization won’t address individual personnel actions. According to MU Health Care, the move is a result of restructuring “to better support patients and the future healthcare needs of Missourians.”

Greensboro, N.C.-based Cone Health eliminated 68 senior-level jobs. The job eliminations occurred Feb. 21, Cone Health COO Mandy Eaton told The Alamance News. Of the 68 positions eliminated, 21 were filled. Affected employees were offered severance packages. 

The newly merged Greensburg, Pa.-based organization made up of Excela Health and Butler Health System eliminated 13 filled managerial jobs. The affected employees and positions are from across both sides of the new organization, Tom Chakurda, spokesperson for the Excela-Butler enterprise, confirmed to Becker’s. The positions were in various support functions unrelated to direct patient care.

Crozer Health, a four-hospital system based in Upland, Pa., is laying off roughly 215 employees amid financial challenges. The system announced the layoffs March 15 as part of its “operational restructuring plan” that “focuses on removing duplication in administrative oversight and discontinuing underutilized services.” Affected employees represent about 4 percent of the organization’s workforce.

Philadelphia-based Penn Medicine is eliminating administrative positions. The change is part of a reorganization plan to save the health system $40 million annually, the Philadelphia Business Journal reported March 13. Kevin Mahoney, CEO of the University of Pennsylvania Health System, told Penn Medicine’s 49,000 employees last week that changes include the elimination of a “small number of administrative positions which no longer align with our key objectives,” according to the publication. The memo did not indicate the exact number of positions that were eliminated.

Sovah Health, part of Brentwood, Tenn.-based Lifepoint Health, eliminated the COO positions at its Danville and Martinsville, Va., campuses. The responsibilities of both COO roles will now be spread across members of the existing administrative team. 

Valley Health, a six-hospital health system based in Winchester, Va., eliminated 31 administrative positions. The job cuts are part of the consolidation of the organization’s leadership team and administrative roles. 

Marshfield (Wis.) Clinic Health System said it would lay off 346 employees, representing less than 3 percent of its employee base.

February

St. Mark’s Medical Center in La Grange, Texas, is cutting nearly 50 percent of its staff and various services amid financial challenges. 

Roseville, Calif.-based Adventist Health plans to go from seven networks of care to five systemwide to reduce costs and strengthen operations. The reorganization will result in job cuts, including reducing administration by more than $100 million.

Arcata, Calif.-based Mad River Community Hospital is cutting 27 jobs as it suspends home health services.

Hutchinson (Kan.) Regional Medical Center laid off 85 employees, a move tied to challenges in today’s healthcare environment. 

January

Oklahoma City-based OU Health eliminated about 100 positions as part of an organizational redesign to complete the integration from its 2021 merger.

Memorial Sloan Kettering Cancer Center announced it would lay off to reduce costs amid widespread hospital financial challenges. The layoffs are spread across 14 sites in New York City, and equate to about 1.8 percent of Memorial Sloan’s 22,500 workforce.

St. Louis-based Ascension completed layoffs in Texas, the health system confirmed in January. A statement shared with Becker’s says the layoffs primarily affected nonclinical support roles. The health system declined to specify to Becker’s the number of employees or positions affected.

Lebanon, N.H.-based Dartmouth Health is freezing hiring and reviewing all vacant jobs at its flagship hospital and clinics in an effort to close a $120 million budget gap. 

Chillicothe, Ohio-based Adena Health System announced it would eliminate 69 positions — 1.6 percent of its workforce — and send 340 revenue cycle department employees to Ensemble Health Partners’ payroll in a move aimed to help the health system’s financial stability.

Ascension St. Vincent’s Riverside in Jacksonville, Fla., will end maternity care at the hospital, affecting 68 jobs, according to a Workforce Adjustment and Retraining Notification filed with the state Jan. 17. The move will affect 62 registered nurses as well as six other positions.

Visalia, Calif.-based Kaweah Health said it aimed to eliminate 94 positions as part of a new strategy to reduce labor costs. The job cuts come in addition to previously announced workforce reductions; the health system already eliminated 90 unfilled positions and lowered its workforce by 106 employees. 

Oklahoma City-based Integris Health said it would eliminate 200 jobs to curb expenses. The eliminations include 140 caregiver roles and 60 vacant jobs.

Toledo, Ohio-based ProMedica announced plans to lay off 262 employees, a move tied to its exit from a skilled-nursing facility joint venture late last year. The layoffs will take effect between March 10 and April 1. 

Employees at Las Vegas-based Desert Springs Hospital Medical Center were notified of layoffs coming to the facility, which will transition to a freestanding emergency department. There are 970 employees affected. Desert Springs is part of the Valley Health System, a system owned and operated by King of Prussia, Pa.-based Universal Health Services.

Philadelphia-based Jefferson Health plans to go from five divisions to three in an effort to flatten management and become more efficient. The reorganization will result in an unspecified number of job cuts, primarily among executives.

December

Pikeville (Ky.) Medical Center said it would lay off 112 employees as it outsources its environmental services department. The 112 layoffs were effective Jan. 1, 2023.

Southern Illinois Healthcare, a four-hospital system based in Carbondale, announced it would eliminate or restructure 76 jobs in management and leadership. The 76 positions fall under senior leadership, management and corporate services. Included in that figure are 33 vacant positions, which will not be filled. No positions in patient care are affected. 

Citing a need to further reduce overhead expenses and support additional investments in patient care and wages, Traverse City, Mich.-based Munson Health said it would eliminate 31 positions and leave another 20 jobs unfilled. All affected positions are in corporate services or management. The layoffs represent less than 1 percent of the health system’s workforce of nearly 8,000. 

November

West Reading, Pa.-based Tower Health on Nov. 16 laid off 52 corporate employees as the health system shrinks from six hospitals to four. The layoffs, which are expected to save $15 million a year, account for 13 percent of Tower Health’s corporate management staff.

St. Vincent Charity Medical Center in Cleveland closed its inpatient and emergency room care Nov. 11, four days before originally planned — and laid off 978 workers in doing so. After the transition, the Sisters of Charity Health System will offer outpatient behavioral health, urgent care and primary care.

October

Sioux Falls, S.D.-based Sanford Health announced layoffs affecting an undisclosed number of staff in October, a decision its CEO said was made “to streamline leadership structure and simplify operations” in certain areas. The layoffs primarily affect nonclinical areas.

Kaiser Permanente reports $2.1B profit, 2.9% operating margin in Q2 2023

Posted on by • Posted in Geisinger Health, Health System, Hospital, Hospital Industry, Kaiser Permanente, Net Income, Nonoperating Income, Operating Expense Reduction, Operating Expenses, Operating Income, Operating Margin, Operating Metrics, Operating Performance, Operating Revenue, Risant Health • Leave a comment

https://www.fiercehealthcare.com/providers/kaiser-permanente-reports-21b-profit-29-operating-margin-q2-2023

Kaiser Permanente built on 2023’s strong start with $2.08 billion of net income during the quarter ended June 30, bringing its midyear total to about $3.29 billion, the integrated system announced late Friday.

Operating income was also strong at $741 million (2.9% margin) and raised the organization’s six-month performance to $974 million (1.9% margin).

The numbers are both a sequential improvement and a stark turnaround from 2022. By the midpoint of that year, Kaiser Permanente was reporting a $1.3 billion net loss for the quarter and an $89 million operating gain (0.4% margin). Across 2022’s first half, the system had been down a total of $2.26 billion and added just $17 million from operations (0.0% margin).

The Oakland, California-based nonprofit is likely safe from repeating the nearly $4.5 billion net loss and $1.3 billion operating loss of full-year 2022.

Leadership, however, noted that the integrated system historically sees higher operating margins during the first half of the year “due in part to the annual enrollment cycle and seasonal care.”

“Our second-quarter financial results reflect operational improvements that, together with our ongoing expense reduction efforts, will help us face additional financial pressures in the second half of the year,” Kathy Lancaster, executive vice president and chief financial officer at Kaiser Permanente, said in a release. “The process of building our financial performance back to pre-pandemic levels requires that we continue to redesign our cost structure to support investments in our facilities, technology and people while staying competitive in a dynamic healthcare marketplace.”

Kaiser Permanente reported $25.17 billion in operating revenues for the second quarter, a 7.2% increase year over year. Operating expenses increased 4.5% year-over-year to $24.42 billion.

“Like all health systems, Kaiser Permanente is experiencing ongoing cost headwinds and volatility driven by inflation, labor shortages, and the lingering effects of the pandemic on access to care and service,” the system wrote in a release.

Kaiser Permanente’s membership has increased by more than 81,000 members since the start of the year and sits at almost 12.7 million as of June 30. The organization noted that it has kicked off an outreach campaign for Medicaid members “to ensure they have critical enrollment information as states go through the mandated process of eligibility redetermination.”

The largest impact on Kaiser Permanente’s bottom line came from investments. Owing to “favorable financial market conditions,” the organization recorded $1.34 billion in “other income and expense,” nearly a full reversal of the $1.39 billion loss on the same line item it’d logged during the same period last year.

The system’s capital spending reached $824 million for the quarter, which was up from $789 million during the second quarter of 2022 but a pullback from the first quarter of 2023’s $930 million.

“The post-pandemic financial pressures have led many in the industry to cut back on care and service,” CEO Greg Adams said in an accompanying statement. “At Kaiser Permanente, we remain focused on improving access and affordability for our patients, members and communities, which requires continued investment in care and coverage. … I want to thank all employees and physicians for turning the disruptions and challenges of the past three years into opportunities to make our healthcare system stronger and more equitable, with improved outcomes for all.”

Kaiser Permanente is the largest nonprofit health system in the country by revenue with more than $95 billion in annual revenues. As of June 30, it spanned 39 hospitals, 622 medical offices and 43 clinics in addition to its millions of covered health plan members.

Earlier in the year the system highlighted efforts to trim administrative and discretionary spending as well as a workforce push that improved clinical hiring by 15% year over year. It is in the midst of negotiating a new labor contract covering 85,000 unionized healthcare workers who are seeking workforce development investments and higher staffing levels across clinical settings.

The organization is also working toward its high-profile acquisition of fellow integrated nonprofit Geisinger Health, which Kaiser Permanente said would be the first step toward a cross-country value-based care organization called Risant Health.

Hospitals still struggling to retain talent

Posted on by • Posted in Cost Management, Cost Reduction, Health System, Hospital, Hospital Industry, Labor Spend Management, Nurse Retention, Nurse Vacancy Rates, Nurses Compensation, Nurses Leadership, Nurses Shortage, Operating Expense Reduction, Operating Expenses, Operating Income, Operating Margin, Operating Performance, Recruiting, Retention, Retirement, Talent Management, Talent Pipelines, Turnover Rates • Leave a comment

https://mailchi.mp/c02a553c7cf6/the-weekly-gist-july-28-2023?e=d1e747d2d8

Of all the pandemic’s impacts still felt today, disruptions to the healthcare workforce and rising labor costs may be most impactful to current health system operations.

Over the next three editions of the Weekly Gist, we’ll be exploring the lingering effects of this workforce crisis, with a focus on nurse staffing and recruitment.


In this week’s graphic, we use data from the 2023 NSI National Health Care Retention Report to show how hospital turnover and vacancy rates have changed over the past several years. 

While wage increases helped reduce hospital registered nurse (RN) turnover rates from 27 percent in 2021 to 23 percent in 2022, nurses—along with hospital employees in general—are still changing jobs at higher rates than before the pandemic.

Over half of all hospitals still face nurse vacancy rates above 15 percent, a slight improvement from 2022 but still far more than before the pandemic.

While the worst of nursing turnover appears to have passed, the “rebasing” of wages (for nursing, 27 percent higher compared to 2019) will provide ongoing pressure to strained hospital margins.

A Mid-Year Update on 2023 Healthcare Trends

Posted on by • Posted in Alternative Payment Model, Health Disparity, Health Equity, Health System, Hospital, Hospital Industry, Inflation, Market Consolidation, Market Trends, Non Traditional Providers, Operating Income, Operating Margin, Operating Metrics, Operating Performance, Private Equity, Public Health Emergency (PHE), Telemedicine, Telemedicine Strategy, Workforce Shortages • Leave a comment

A Mid-Year Update on 2023 Healthcare Trends

In January 2023, the Rockefeller Institute published a three-part blog series on trends to watch in healthcare in 2023. The series covered broad issues related to the healthcare workforce, economy, and health policy, and highlighted internal industry changes and trends in service delivery, quality, and equity.

Here, we provide a recap and mid-year update on those trends.

The Public Health Emergency:

In January, we anticipated the COVID-19 federal public health emergency (PHE) would end at some point during the year and its ending would impact the industry by rolling back flexibilities and programs that were temporarily put in place to combat the pandemic. The end of the PHE, while not a “trend” per se, held significant potential to alter the trajectory of trends in healthcare coverage, access, and care delivery that were occurring during the pandemic.

Mid-year Update: As predicted, the PHE was not renewed and ended on May 11, 2023. The most notable impact of the non-renewal of the PHE was the end of continuous Medicaid public health insurance coverage. The Kaiser Family Foundation’s Medicaid Enrollment Tracker shows that, as of July 5, 2023, 1,652,000 Medicaid enrollees were disenrolled by the District of Columbia and 28 states reporting data. For context, this means that 39% of people with a completed renewal were disenrolled in reporting states, though disenrollment rates varied significantly across those states from 16 percent in Virginia to 75 percent in South Carolina. The eligibility redetermination process that can lead to a potential disenrollment is being conducted differently in each state with some states moving quickly to make redeterminations and others doing the process more deliberately over the course of the year with a clear intent to avoid shedding people from the Medicaid program because of an inability to submit administrative paperwork.

The process for eligibility renewals will continue to play out over the course of the next year since states have until mid-2024 to update all Medicaid enrollees’ eligibility status. Also notable are some changes made under the purview of the PHE that persist despite the emergency’s conclusion. For example, access to COVID-19 vaccinations and certain COVID-19 treatments generally have not been affected. Some telehealth flexibilities that were allowed under the PHE are also staying in effect, at least until the end of 2024.

Healthcare Workforce Shortages:

Prior to the pandemic, larger demographic trends in society were already impacting the supply of the healthcare workforce. The number of people aging and needing healthcare services was growing while the number of people available to provide care was not keeping pace thus creating a long-term healthcare workforce shortage.

Mid-year Update: The workforce shortage continues. As outlined in a May 23rd Becker’s Hospital Review article, several sources point to a continued shortage. They include a report that says the US could see a deficit of 200,000 to 450,000 registered nurses by 2025. Within the next five years, another report also projects a shortage of more than 3.2 million lower-wage healthcare workers, such as medical assistants, home health aides, and nursing assistants. As a result, some healthcare providers are becoming more creative in their efforts to counteract the workforce shortage: creating alumni networks from which to recruit or providing other benefits to their workforce, such as housing or educational assistance. Policymakers can help counteract the negative impacts of the workforce shortage through a variety of strategies. With the shortage expected to continue, it will be important to enact additional policies that bolster the workforce.

Price Inflation:

As we noted, price inflation was significant in 2022 but was not unique to the health sector. Inflation was particularly exacerbated by the re-opening of the economy after the pandemic, the continued war in Ukraine, and supply chain challenges.

Mid-year Update: Prices for many consumer goods and services increased faster than usual, with overall inflation reaching a four-decade high in mid-2022. The Bureau of Labor Statistics (BLS) reported inflation rates have slowed, with overall prices growing by 6 percent in February 2023 compared to the previous year. Interestingly, prices for medical care increased only 2.3 percent. Similarly, BLS reported that the average price of health care in the United States increased by 0.7 percent in the 12 months ending May 2023, following a previous increase of 1.1 percent. The slower price growth in healthcare compared to other sectors of the economy is highly unusual,[i] and while inflation is not easily influenced by state-level policymakers’ actions alone, the trend is still worth monitoring to better understand the impacts on healthcare access and quality. As of early July, the latest predictions from PwC are that healthcare costs will rise 7% in 2024.

Declining Margins at Hospitals:

Previous analysis by the consulting firm Kaufman Hall predicted that more than half of all hospitals would have negative margins at the end of 2022. As we noted, this was due to such factors as higher-than-normal expenses for staff, supplies, and pharmaceuticals and lower revenues.

Mid-year Update: The latest report from Kaufman Hall offers data that shows a reversal in this trend for the first part of 2023. May was the third consecutive month in which hospital margins were positive after operating in the red for most of 2022. The return to normal is largely driven by revenues that are more in line with pre-pandemic levels. With revenues returning to more normal levels, expenses will be particularly important to watch for the remainder of 2023. If hospital expenses continue to outweigh revenues, policymakers may need to evaluate the financial health of providers and the potential impact that may have on access to services for patients.

Private Equity in Healthcare:

We predicted that private equity (PE) would continue to grow in healthcare, pointing to a PwC consulting report that indicated that PE companies still had plenty of “dry powder,” or money, to invest in 2023.

Mid-year Update: There has been a slowdown in private equity deals over the last year. But it is notable that there were still 200 private equity deals in healthcare in the first quarter of 2023, according to PitchBook’s healthcare services report released in May 2023. While lower than the year before, this is still considered active when compared to pre-pandemic PE dealmaking. Because of the waning of the pandemic and stability returning to the healthcare sector, it is more likely that PE deals stabilize in 2023. And some industry predictions indicate that dealmaking will bounce back further in the second half of 2023. As noted in our previous blog, it will be important to monitor the proliferation of PE in healthcare and determine its impact on healthcare markets, care delivery, innovation, and quality.

Consolidations:

Like many other industries, consolidations of all sorts have been happening in healthcare. The consolidations are both vertical—combining two or more stages of production normally operated by separate companies into one company, such as when hospitals or insurers employ physicians and/or acquire physician practices or other entities like pharmacies—and horizontal—combining organizations that provide the same or similar services, such as hospitals acquiring hospitals.

Mid-year Update: Consolidations of all sorts of healthcare entities continued in 2023 with some of the biggest potential consolidations yet. Those include the proposed merger of two major bi-coastal health system providers: Geisinger, based in Pennsylvania, and Kaiser, based in California. Although the deal must still go through regulatory approval, if completed, the two systems will create a nonprofit that will look to add five or six more systems nationally over the next five years. Other notable consolidations include the finalization of tech-giant Amazon’s purchase of One Medical, a primary care network. And Optum, one of the largest conglomerates that is a subsidiary of United Health Group, increased its net revenue growth by 25% to $54.1 billion in the first quarter of 2023, primarily due to more patients visiting OptumHealth clinics and growth in OptumRx pharmacy scripts processed. Optum’s growth is likely to continue in 2023 as they expect to add another 10,000 physicians. Case in point, in February of this year, Optum paid an undisclosed sum for Crystal Run Healthcare, a network of nearly 400 providers in New York. A goal of consolidation has been better coordination of patient care for improved outcomes and value. Results have been mixed and it is therefore an important trend for policymakers and researchers to monitor and to ensure the impacts are positive.

Alternate Payment Models:

Alternate payment models (APMs) in healthcare have been expanding especially since enactment of the Patient Protection and Affordable Care Act in 2010. They are primarily being developed by the Center for Medicare and Medicaid Innovation (CMMI) which has driven payment policy (including APMs) in the two big government healthcare programs: Medicaid and Medicare. There have been several iterations of APMs—over 50 models—but the one common theme is that all of them generally seek to reward better care.

Mid-year Update: Since the start of 2023, the most notable expansion of the trend toward more alternate payment models was CMMI’s introduction of a new primary care-focused APM called Making Care Primary. In addition to this model, it is expected that the Centers for Medicaid and Medicare Services (CMS), which oversees the operation of these two large public health insurance programs, will introduce more new payment models in 2023, including one that allows states to manage the total cost of care in a given region. This may take various forms, including something akin to Maryland’s global budget, which is used statewide. Since the total cost of care model has yet to be officially revealed, this trend and the emergence of any new developments is worth watching in the second half of 2023. Policymakers can learn from these various payment models and use them to inform the plans implemented in their own state or region in order to improve healthcare.

Attention to Health Equity:

A notable aspect of the pandemic was the disparate impact it had on people of color and other marginalized groups. In response, policymakers and providers began paying more attention to the underlying cause of these disparities. In 2021, President Joe Biden signed an executive order to focus federal resources and attention on reducing health disparities.

Mid-year Update: Increased attention to health equity in healthcare has continued. Ernst and Young, an international consulting group, released its first-ever report on the state of health equity in the United States, which involved a survey of over 500 providers to begin tracking their methods for, and progress in, addressing health disparities. More recently, in June 2023, The Joint Commission on the Accreditation of Healthcare Organizations (JCAHO) announced that it will be adding a certification program for healthcare organizations specifically targeted towards improving health equity. While attention to equity has grown, what will be interesting to watch in the second half of 2023 is the degree to which such efforts are having an impact on actually reducing disparities. Understanding the impacts of various interventions can help policymakers expand efforts that are effective.

Digital TeleHealth Delivery Expansion:

The use of digital health expanded dramatically from 2020 to 2022 as social distancing practices were adopted and telehealth options became more widely available. As noted in our blog series, digital health “includes mobile health (mHealth), health information technology (IT), wearable devices, telehealth and telemedicine, and personalized medicine.” It also includes, “mobile medical apps and software that support the clinical decisions doctors make every day to do artificial intelligence and machine learning.”

Mid-year Update: At the end of 2022 and the start of 2023, the ability to infuse capital to drive the expansion of digital health seemed tenuous, in part due to the collapse of Silicon Valley Bank (SVB). As noted by the publication Pitchbook and CB Insights, venture capital funding in the digital health space totaled $7.5 billion in 2022, a 57 percent year-over-year drop. Although the fast pace of investment in digital health may have slowed since its explosion during the pandemic, the expansion of digital health continues. Our January blog suggested that areas such as behavioral health, care at home, and maternal health were areas to watch. In 2023, digital access is expanding in other areas, such as in-home urgent primary care to allow for the treatment of complex injuries and illnesses with the goal of reducing emergency department visits. And other important digital health deals are still occurring: health tech startup Florence picked up Zipnosis from Bright Health to expand its virtual care capabilities. And with the launch of consumer-facing tech products, such as Chat GPT and Apple Vision Pro in the first half of 2023, additional opportunities for applying such technologies in healthcare may fuel further expansion of digital health. Policies that are developed in the future may want to support the growth of such innovation, while also being mindful to monitor the potential impacts on care.

Expansion of Non-Traditional Providers:

In January, we noted an emergence of companies in healthcare whose genesis was something other than healthcare. The blog pointed to examples of how companies such as Walgreens, CVS, and Amazon were expanding their offerings in healthcare.

Mid-year Update: Non-traditional entities continue to expand in the healthcare space. Notable examples include the recent acquisitions and expansions made by CVS. One of these expansions is being done through its affiliation with the insurance company, Aetna. Through Aetna, CVS has entered the insurance exchange market in four more states in 2023, in addition to the 12 states in which it already operates. CVS also closed a deal in the first half of 2023 to acquire Oak Street Health for over $10 billion. And, in March 2023, CVS announced it had officially acquired Signify Health, a digital telehealth company that enables more care to occur in-home. As noted earlier, Amazon officially completed its deal to acquire OneMedical and United Health Group is working on expanding its use of value-based care through a partnership with Walmart. Monitoring the impact of these emerging companies in healthcare will be important for policymakers that have historically only focused on more traditional providers, such as hospitals. These non-traditional entrants, in many cases, are large organizations with substantial resources and their impact may be just as significant if not greater than traditional providers.

Conclusion

These trends merit close attention in the second half of 2023. As healthcare takes on new shapes, the implications for those in the sector and all who depend on it will be huge. In addition, there are important implications for state and federal policymakers who will need to consider how these trends impact access, affordability, and quality of health care, so they can determine whether and how government might help to accelerate beneficial innovations, invest in promising trends, prevent or reverse harmful trends, and monitor the impacts on consumers.

Comments on Current Management Issues in the Healthcare C-Suite: Management of Labor in Trying Financial Circumstances

Posted on by • Posted in C-Suite, Cost Management, Cost Reduction, Health System, Hospital, Hospital Industry, Labor Spend Management, Operating Expense Reduction, Operating Expenses, Operating Margin, Operating Performance • Leave a comment
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Peter Drucker, the hall of fame management guru, once famously said that the hardest business organization to run in America was a hospital. If that comment was true so many years ago, imagine what Drucker would have to say about the difficulty of hospital management right now.

Hospital financial performance suffered significantly in 2022 and recovery during 2023 has been quite slow. This trend suggests the question,

“What steps are hospital C-suites taking to recover pre-Covid financial stability?”

Erik Swanson manages all analyses for our monthly Kaufman Hall Flash Report and he and I speculated that an industry-wide hospital recovery could not be achieved without reductions in force across the hospital ecosystem. Some research on our part determined that no official organization tracks hospital layoffs over time but we wondered if we could use our Flash Report data, which is provided to us by Syntellis Performance Solutions, to reach an informed conclusion.

What we were able to do was prepare three types of charts, as follows:

The first chart measures net employee percentage change by month. This chart shows whether overall hospital employment is increasing or decreasing over time and by how much.

The second chart attempts to establish the median turnover for hospitals over an annual period and then measure the deviation from that turnover rate. A greater deviation from what might be termed “normal turnover” suggests that an increasing number of hospitals are using reductions in force to more quickly reduce the cost of doing business.

The third chart shows average FTEs per occupied bed on a comparative basis looking at month-to-month and year-to-year statistics.

The first chart, Net Employee Percentage Change by Month, begins at January 1, 2018, and continues to March 1, 2023 (Figure 1). Overall additions to hospital employment remained generally positive through January 1, 2020. Overall hospital employment then went generally negative from March 2020 (the onset of Covid restrictions) to March 2022. The reductions in hospital employees during this period were likely the result of the “great resignation” during the worst of the Covid pandemic. But then, from July 2022 to March 2023, overall hospital employees demonstrated by the Flash Report dropped dramatically with an overall 2% decrease at the March 2023 date. This statistic suggests more than simply increased hospital turnover, but rather a formal layoff process initiated across many hospital organizations, along with aggressive management of contract labor.

Figure 1: Net Employee Percentage Change by Month

The second chart demonstrates the deviation from expected turnover at levels of 2x, 3x, 4x, and 5x by number of hospitals (Figure 2). No matter which measure you examine, the deviation of employees from expected turnover spiked significantly in April 2023 and even more so in May 2023. This again suggests the aggressive management of labor costs that likely could not occur without the intentional reduction of actual positions and/or the cost of these positions. 

Figure 2: Number of Hospitals with Deviations from Expected Turnover at 2x, 3x, 4x, and 5x the Median

The last chart provides a remarkable set of observations (Figure 3). FTEs per adjusted occupied bed (AOB) declined by 8.3% between June 2023 and July 2023. The year-over-year variation for July 2023 was a decline of 11.01%. Our data further reveals that the FTE per AOB statistic has declined in five of the past six months on a month-over-month basis.

Figure 3: Median Change in FTEs per Adjusted Occupied Bed by Month

The conclusion here is that the return of the hospital industry to pre-Covid financial results has been no walk in the park. 2022 was, of course, a dismal financial year for the hospital industry. And while 2023 has shown improvement, the usual management steps to recovery have been only moderately effective. The data and analysis above demonstrate that C-suites across America are moving to stronger measures to assure the financial survivability and competitiveness of their organizations.

There is no revenue solve here, or at least not in the current environment: costs must come down and they must come down materially. From the sense and the trend of the data it would seem that hospital executive teams get the joke.

California system’s 10.2% operating margin bucks national trend

Posted on by • Posted in Credit Quality, Credit Ratings, Credit Upgrade, Financial Reserves, Financial Stewardship, Financial Strength, Financial Viability, Health System, Hospital, Hospital Industry, Labor Spend Management, Nurse Agency Staffing, Nurse Retention, Nurses Compensation, Operating Expense Reduction, Operating Expenses, Operating Income, Operating Margin, Operating Metrics, Operating Performance, Operating Revenue, Retention, Talent Management • Leave a comment
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Mountain View, Calif.-based El Camino Health ended the first quarter with an impressive operating margin of 10.2 percent when many health systems saw their margins hover above zero or fall into the red. The system’s revenue for the quarter totaled $131,290. 

For the nine months ended March 31, the two-hospital system posted an operating gain of $141.4 million on revenue of just over $1 billion. 

However, like most health systems, El Camino’s expenses are substantially higher than the same period last year, increasing 10.6 percent year over year for the nine months ending March 31, 2023, to $881.9 million. 

The system is making a conscious effort to march down labor costs while also placing a significant emphasis on retention. In June, El Camino agreed a deal to increase pay for nurses by 16 percent over three years.

“Like nearly all hospitals, our nursing staff comprises the largest part of our workforce. With the recruitment of a single nurse estimated to be nearly $60,000, our primary strategy to reduce labor costs is to focus on decreasing turnover,” El Camino CEO Dan Woods told Becker’s.

“Our turnover rate for nurses is just about 8 percent while the turnover rate nationally is still running at 22 percent.”

In March, the system also received a credit rating upgrade from Moody’s, which noted the system’s “superlative cash metrics and operating performance.” Fitch Ratings also revised El Camino’s outlook to positive in February, noting that the system has a history of generating double-digit operating EBITDA margins, driven by a solid market position that features strong demographics and a very healthy payer mix.

Taking a historical view of hospital operating margins

Posted on by • Posted in Competition, Financial Distress, Financial Performance, Financial Pressure, Financial Reserves, Financial Stewardship, Financial Strength, Financial Viability, Financially Distressed, Health System, Hospital, Hospital Industry, Operating Expense Reduction, Operating Expenses, Operating Income, Operating Margin, Operating Metrics, Operating Performance, Operating Revenue • Leave a comment

https://mailchi.mp/cc1fe752f93c/the-weekly-gist-july-14-2023?e=d1e747d2d8

So far, 2023 is shaping up to be a slightly better year for hospital performance, but it comes on the heels of unprecedented financial difficulties for the sector.

In the graphic above, we evaluated nearly 30 years of historical data from Kaufman Hall and the American Hospital Association to provide a broader perspective on hospital operating margins over time. 2020 and 2022 have been the only years in which a majority of hospitals—53 percent—posted a negative operating margin. 

During the most comparable periods of recent economic hardship, the “dot-com bubble burst” of the late 1990s and the 2009 Great Recession, the share of hospitals with negative operating margins amounted to only 42 and 32 percent, respectively.

With this context, hospitals’ current financial distress is more severe than anything we’ve seen in the past three decades. 

Healthcare is clearly no longer recession-proof: a four percent operating margin—the level needed for health systems to not only sustain operations but also invest in growth—feels even more elusive as labor costs remain high, surgical care continues to shift to outpatient settings, the second half of the Baby-Boom generation ages into Medicare, and deep-pocketed competitors compete for profitable services.

9 recent health system downgrades and outlook revisions

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Here is a summary of recent credit downgrades and outlook revisions for hospitals and health systems.

The downgrades and downward revisions reflect continued operating challenges many nonprofit systems are facing, with multiyear recovery processes expected.

Downgrades:

Yale New Haven (Conn.) Health: Operating weakness and elevated debt contributed to the downgrade of bonds held by Yale New Haven (Conn.) Health, Moody’s said May 5. The bond rating slipped from “Aa3” to “A1,” and the outlook was revised to stable from negative.

The system saw a second downgrade as its default rating and that on a series of bonds were revised one notch to “A+” from “AA-” amid continued operating woes, Fitch said June 28.

Not only have there been three straight years of such challenges, but the operating environment continues to cast a pall into the second quarter of the current fiscal year, Fitch said.

UC Health (Cincinnati): The system was downgraded on a series of bonds, Moody’s said May 10.

The move, which involved a lowering from a “Baa2” to “Baa3” grade, refers to such bonds with an overall value of $580 million.

In February, UC Health suffered a similar downgrade from “A” to “BBB+” on its overall rating and on some bonds because of what S&P Global termed “significantly escalating losses.”

UNC Southeastern (Lumberton, N.C.): The system, which is now part of the Chapel Hill, N.C.-based UNC Health network, saw its ratings on a series of bonds downgraded to “BB” amid operating losses and sustained weakness in its balance sheet, S&P Global said June 23.

While UNC Southeastern reported an operating loss of $74.8 million in fiscal 2022, such losses have continued into fiscal 2023 with a $15 million loss as of March 31, S&P Global said. The system had earlier been placed on CreditWatch but that was removed with this downgrade.

Butler (Pa.) Health: The system, now merged with Greensburg, Pa.-based Excela Health to form Independence Health System, saw its credit rating downgraded significantly, falling from “A” to “BBB.”

The move reflects continued operating challenges and low patient volumes, Fitch said June 26.

Such operating challenges, including low days of cash on hand, could result in potential default of debt covenants, Fitch warned.

Outlook revisions:

Redeemer Health (Meadowbrook, Pa.): The system had its outlook revised to negative amid “persistent operating losses,” Fitch Ratings said June 14. The health system, anchored by a 260-bed acute care hospital, reported a $37 million operating loss in the nine months ending March 31, Fitch said.

Thomas Jefferson University (Philadelphia): The June 9 downward revision of its outlook, which includes both the health system and the university’s academic sector, was due to sustained operating weakness, S&P Global said.

IU Health (Indianapolis): While it saw ratings affirmed at “AA,” the 16-hospital system had its outlook downgraded amid persistent inflationary pressures and large capital expense, Fitch said May 31.

UofL Health (Louisville, Ky.): Slumping operating income and low days of cash on hand (42.8 as of March 31) contributed to S&P Global revising its outlook for the six-hospital system to negative May 24.

The Hospital Makeover—Part 2

Posted on by • Posted in Board, C-Suite, Financial Distress, Financial Instability, Financial Performance, Financial Reserves, Financial Stewardship, Financial Strength, Financial Viability, Financially Distressed, Health System, Hospital, Hospital Industry, Labor Spend Management, Leadership, Leadership Vision, Leadership Will, Operating Expense Reduction, Operating Expenses, Operating Income, Operating Margin, Operating Performance, Operating Revenue, Physician Compensation, Physician Employment, State of the Union, Talent Management • Leave a comment
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America’s hospitals have a $104 billion problem.

That’s the amount you arrive at if you multiply the number of physicians employed by hospitals and health systems (approximately 341,200 as of January 2022, according to data from the Physicians Advocacy Institute and Avalere) by the median $306,362 subsidy—or loss—reported in our Q1 2023 Physician Flash Report.

Subsidizing physician employment has been around for a long time and such subsidies were historically justified as a loss leader for improved clinical services, the potential for increased market share, and the strengthening of traditionally profitable services.

But I am pretty sure the industry did not have $104 billion in losses in mind when the physician employment model first became a key strategic element in the hospital operating model. However, the upward reset in expenses brought on by the pandemic and post-pandemic inflation has made many downstream hospital services that historically operated at a profit now operate at breakeven or even at a loss. The loss leader physician employment model obviously no longer works when it mostly leads to more losses.

This model is clearly broken and in demand of a near-term fix. Perhaps the critical question then is how to begin? How to reconsider physician employment within the hospital operating plan?

Out of the box, rethink the physician productivity model. Our most recent Physician Flash Report data shows that for surgical specialties, there was a median $77 net patient revenue per provider wRVU. For the same specialties, there was a median $80 provider paid compensation per provider wRVU. In other words, before any other expenses are factored in, these specialties are losing $3 per wRVU on paid compensation alone. Getting providers to produce more wRVUs only makes the loss bigger.

It’s the classic business school 101 problem.

If a factory is losing $5 on every widget it produces, the answer is not to produce more widgets. Rather, expenses need to come down, whether that is through a readjustment of compensation, new compensation models that reward efficiency, or the more effective use of advanced practice providers.

Second, a number of hospital CEOs have suggested to me that the current employed physician model is quite past its prime. That model was built for a system of care that included generally higher revenues, more inpatient care, and a greater proportion of surgical vs. medical admissions. But overall, these trends were changing and then were accelerated by the Covid pandemic. Inpatient revenue has been flat to down. More clinical work continues to shift to the outpatient setting and, at least for the time being, medical admissions have been more prominent than before the pandemic.

Taking all this into account suggests that in many places the employed physician organizational and operating model is entirely out of balance. One would offer the calculated guess that there are too many coaches on the team and not enough players on the field. This administrative overhead was seemingly justified in a different loss leader environment but now it is a major contributor to that $104 billion industry-wide loss previously calculated.

Finally, perhaps the very idea of physician employment needs to be rethought.

My colleagues Matthew Bates and John Anderson have commented that the “owner” model is more appealing to physicians who remain independent then the “renter” model. The current employment model offers physicians stability of practice and income but appears to come at the cost of both a loss of enthusiasm and lost entrepreneurship. The massive losses currently experienced strongly suggest that new models are essential to reclaim physician interest and establish physician incentives that result in lower practice expenses, higher practice revenues, and steadily reduced overall subsidies.

Please see this blog as an extension of my last blog, “America’s Hospitals Need a Makeover.” It should be obvious that by analogy we are not talking about a coat of paint here or even new appliances in the kitchen.

The financial performance of America’s hospitals has exposed real structural flaws in the healthcare house. A makeover of this magnitude is going to require a few prerequisites:

  1. Don’t start designing the renovation unless you know specifically where profitability has changed within your service lines and by explicitly how much. Right now is the time to know how big the problem is, where those problems are located, and what is the total magnitude of the fix.
  2. The Board must be brought into the discussion of the nature of the physician employment problem and the depth of its proposed solutions. Physicians are not just “any employees.” They are often the engine that runs the hospital and must be afforded a level of communication that is equal to the size of the financial problem. All of this will demand the Board’s knowledge and participation as solutions to the physician employment dilemma are proposed, considered, and eventually acted upon.

The basic rule of home renovation applies here as well: the longer the fix to this problem is delayed the harder and more expensive the project becomes. The losses set out here certainly suggest that physician employment is a significant contributing factor to hospitals’ current financial problems overall. It would be an understatement to say that the time to get after all of this is right now.