Tag Archives: Employee Layoffs

Molina to cut 1,400 positions to improve financial performance

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http://www.healthcarefinancenews.com/news/molina-cut-1400-positions-improve-financial-performance?mkt_tok=eyJpIjoiTXpVelkyRXhZMkpqTmpKaSIsInQiOiJFVjFscVRVVDdXZmZqek02STNMSVNjelwvREEwMmZmckZrWmNyZjNrQnVcL0szTGZuNXA4ZGdrOGRhT1V5bnREanBwWitPbTNkQllLZW5BTmd4VDk5TDg0ak1NNStnTllqdEllQlNpQmRZbDUwcm5JdVNaZ1lJcmpVVXJNYWxcL0JcL28ifQ%3D%3D

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The cuts follow removal of CEO and CFO due to financial losses blamed on Affordable Care Act market.

Molina Healthcare, which fired its CEO and CFO in May due to the poor financial performance of the company, will eliminate about 1,400 jobs over the next few months, according to an internal memo obtained by Reuters.

The cuts are due to financial losses blamed on Molina’s individual business in the Affordable Care Act market, in which it has been a major player.

Molina will reduce its workforce by the elimination of 10 percent of its 6,400 corporate positions and about 10 percent of 7,700 health plan jobs, according to Reuters. It will not affect Molina’s Pathways behavioral health business, which employs about 5,500 people.

Interim CEO and CFO Joe White sent the memo to employees saying the cuts aim to contribute to savings by 2018 in what he called “Project Nickel,” to do more with less.

In March, Molina was touted as an ACA success story.

Former CEO J. Mario Molina, MD, was an outspoken opponent of the Republican plan to repeal and replace the ACA. His brother, John C. Molina, who served as CFO. was also let go in a decision by the board to turn around the company’s financial position.

Last week Molina said it was concerned about Republicans repealing the ACA without having a replacement plan in place, the roll back of Medicaid expansion and the lack of a guarantee of federal cost-sharing reduction payments, which allows insurers to offer lower-income consumers lower deductibles and out-of-pocket expenses.

Molina also argued for the continuation of the individual mandate to get insurance.

“The bedrock of any coverage system is a requirement that people must obtain health insurance,” Molina said. “The lack of such a requirement will be detrimental to the individual market risk pool and will result in adverse selection, which would significantly increase costs.”

In June, Molina said it would file rates for 2018 to remain in the exchange market in Florida.

The California Department of Insurance is releasing on August 1 the insurers which have filed rates for the ACA market in 2018.

72 healthcare layoffs so far in 2017

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http://www.beckershospitalreview.com/hospital-management-administration/72-healthcare-layoffs-so-far-in-2017.html

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The following healthcare layoffs were reported by Becker’s Hospital Review so far in 2017. They are listed below, beginning with the most recent.

Providence plans aggressive cost-cutting, layoffs, amid health care high anxiety

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http://www.oregonlive.com/business/index.ssf/2017/07/providence_plans_aggressive_co.html

Providence Health & Services, Oregon’s largest private-sector employer, is preparing an aggressive cost-cutting campaign that will include layoffs.

The move is clearest sign to date that hospitals face a difficult, uncertain future.

Providence saw its financial position deteriorate markedly in 2016, posting an operating loss of more than $255 million, filings show. Though its annual revenue topped $22 billion and, as a non-profit, it pays no income taxes, Providence is looking to cut costs across its seven-state network, multiple sources say. David Underriner, chief executive of the medical provider’s Oregon operation, would not disclose numbers or locations, but did say, “there will be an impact on people.”

Providence has already cut back in Oregon. Last year, it closed its open-heart surgery program at Providence Portland Medical Center and consolidated that work at St. Vincent’s Medical Center on the city’s westside, Underriner said.

Providence is not alone. St. Charles Health System in Bend has also scaled back spending as its own bottom line suffered in 2016. Oregon Health & Sciences University in Southwest Portland announced a hiring freeze in March.

The new financial weakness comes at a time of high anxiety in health care. A bill to foist a new multi-million-dollar provider tax on hospitals—which would help fund the state’s contribution to Medicaid — was signed into law this week. In Washington, D.C., meanwhile, Senate Republicans continue their efforts to repeal the Affordable Care Act, a move that Providence’s Underriner and many other hospital executives oppose.

Providence Health & Services plans layoffs to cut costs

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http://www.beckershospitalreview.com/hospital-management-administration/providence-health-services-plans-layoffs-to-cut-costs.html

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Providence Health & Services, a 50-hospital system based in Renton, Wash., will implement a cost-cutting plan that involves layoffs, according to The Oregonian.

The system is looking to reduce costs to improve its financial picture. Providence ended 2016 with an operating loss of $255 million on $22 billion in revenue.

David Underriner, CEO of Providence’s Oregon division, would not disclose how many employees would be affected by the layoffs, according to The Oregonian.

Providence has 111,000 employees, 15,000 of which were hired in the past two years.

AHCA could mean 725K fewer healthcare jobs by 2026

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http://www.healthcaredive.com/news/ahca-could-mean-725k-fewer-healthcare-jobs-by-2026/445131/

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Dive Brief:

  • The American Health Care Act (AHCA), as it was passed in the House, would result in the loss of 924,000 jobs over 10 years and spark economic downturns in every state, according to research by the George Washington University Milken Institute School of Public Health and The Commonwealth Fund.
  • The healthcare sector would be hit the hardest, with 725,000 jobs lost by 2026. There would be fewer healthcare jobs immediately in 17 states. The states that would be most affected overall include New York, Pennsylvania and Florida.
  • The primary cause of the job disappearances and state economic downturns would be cuts to healthcare funding, such as more than $800 billion to Medicaid, and lower premium subsidies.

Dive Insight:

The analysis is of the House version of the bill, and the Senate is expected to make changes when it brings its own version up for a vote. But with those negotiations going on behind closed doors, there is not enough information to makes estimates based on the Senate bill.

The report is a warning call to the healthcare industry and another black mark on the increasingly unpopular AHCA. The bill is already opposed by most major industry groups. They balk at the huge cuts to Medicaid and the Congressional Budget Office estimates up to 23 million people would lose coverage.

The threat of jobs losses could become another rallying cry. In fact, healthcare executives shaken by the potential for repeal of the Affordable Care Act (ACA) are already scaling back hiring and new projects in the face of uncertainty. Former CMS Administrator Andy Slavitt said a poll he conducted found nearly 40% of executives said they are slowing hiring and 31% are cutting capital expenses.

Healthcare job growth spiked after the passage of the ACA, which the AHCA seeks to replace. The ACA helped create about 240,000 jobs in the industry, and employment increased from an average of 1.7% in 2010 to 2.5% from 2014 to 2016. But that trend has tempered. Healthcare has averaged 22,000 job gains a month so far this year. The average monthly gain in 2016 was 32,000.

The AHCA phases out Medicaid expansion, which has been an economic boon for states that decided to expand. The authors of the latest report said those states would be hit hardest in financial terms by the bill.

“Hospitals, health systems, clinics and pharmacies might be forced to close or lay off staff as federal funding for healthcare is cut and the number of uninsured patients grows,” the researchers wrote.

Memorial Hermann Health System cuts 350 more employees

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http://www.healthcaredive.com/news/memorial-hermann-health-system-cuts-350-more-employees/446069/

Dive Brief:

  • Memorial Hermann Health System in Houston announced it is laying off 350 employees from its 25,000-employee workforce, Houston Chronicle reported. The system laid off 112 employees in January.
  • Memorial Hermann’s interim President Chuck Stokes pointed to uncertainty in the healthcare industry, escalating costs, declining reimbursements and a softened local economy as the reasons for the layoffs. Stokes took over for former CEO Benjamin Chu, who abruptly left the system last week after serving in the position for about a year.
  • Stokes said the system is profitable and the cuts do not affect patient care. Instead, the layoffs are a result of needing to “prosper under the new normal in healthcare.”

Dive Insight:

Stokes’ talk of “the new normal in healthcare” is something all health systems are facing. Hospitals are merging, acquiring other hospitals and shedding facilities in an attempt to compete in a healthcare system that has fewer hospital admissions, rising costs and lower reimbursements.

Memorial Hermann is one of a growing number of health systems that have decided to cut staff as a way to cope. Recently, other major systems shed employees. Summa Health cut 300 positions, Sutter Health closed a nursing unit and laid off 72 employees, NYC Health + Hospitals cut 476 positions and Banner Health offered severance packages to employees.

No hospitals are immune to these cuts. For-profit health systems are dealing with similar financial problems as nonprofits. Rural and safety-net hospitals might be more at-risk, but large metro systems are also facing issues.

In addition to layoffs, healthcare has seen its share of M&A activity of late as a reaction to the “new normal.”

Over the past month, Palmetto Health and Greenville Health System, both in South Carolina, announced a new nonprofit company that will combine the two systems into one 13-hospital company with 1.2 million patients and $3.9 billion in annual net revenue. Also, Quorum Health recently sold two hospitals to UPMC Susquehanna and Mayo Clinic’s announced it plans to consolidate two hospitals. On the flip side, HCA is looking to buy more hospitals.

Richard Gundling, senior vice president of healthcare financial practices at the Healthcare Financial Management Association, recently told Healthcare Dive that the trend of healthcare M&A will continue as hospitals figure out ways to handle risk-based contracting and other Medicare changes. He said for-profits will likely look for M&A options, especially in rural areas, in hopes of bringing scale, which he said all hospitals want.

Hospitals that transition to new payment models while increasing quality and safety measures, and lowering expenses will be a better position to deal with future changes, he said. “Focusing on increasing value to patients and purchasers is a no-fail strategy,” Gundling said.

Summa Health to cut 300 positions, scale back services in face of $60M operating loss

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http://www.healthcaredive.com/news/summa-health-to-cut-300-positions-scale-back-services-in-face-of-60m-oper/445874/

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Dive Brief:

  • Facing steep operating losses, Summa Health will shed 300 positions and rein in its services, Cleveland.com reported. Half of the eliminated positions are currently empty.
  • The Akron-based health system recorded $30 million in profits in 2016, but expects $60 million in operating losses this year brought on by low inpatient and outpatient numbers.
  • “This year, inpatient and outpatient volumes are dramatically down and, as a result, we are facing staggering operating losses, interim President and CEO Cliff Deveny said in an internal memo to staff on Monday. “While we have considerable cash in reserve to protect us for the short term, this trend must stop immediately.”

Dive Insight:

Summa’s future has been uncertain since CEO Thomas Malone resigned in January. His departure followed a letter signed by 240 Summa physicians giving him a vote of no confidence and urging him to leave. The physicians complained of not being consulted on major changes that would affect patient care at Summa and questioned the nonprofit health system’s decision to sever a contract with emergency physicians.

As patient care shifts from inpatient to outpatient/virtual settings and hospitals face reimbursement cuts, nonprofit and for-profit hospitals alike are struggling to keep operating losses under control. In March, for example, Cleveland Clinic reported a 71% drop in operating income from $480.2 million in 2015 to $139.9 million last year — despite a 12% jump in revenues to $8 billion. Among expenses weighing the system down were pharmaceuticals (up 23%), labor (up 19%) and supplies (up 13%).

More than half of hospitals in the U.S. suffered operating losses in 2016, Cleveland Clinic CEO Toby Cosgrove said earlier this year during a panel to discuss changing demands on healthcare systems. While healthcare reforms are forcing hospitals to transform care delivery, they aren’t being funded adequately to do so, he said.

NYC Health + Hospitals suffered a $76 million operating loss in the first half of fiscal 2017, softened slightly by about $78 million in capital contributions from the city. The health system blamed the loss in part on timing of government payments and the need to count costs like depreciation. The health system has experienced several years of operating losses and had hoped to flip their luck with implementation of a $764 million Epic EHR. However, implementation fell far behind H+H’s original spring 2016 systemwide go-live deadline.

And Boston-based Partners HealthCare suffered $108 million in operating losses for fiscal 2016. The health system has struggled financially since purchasing Neighborhood Health Plan, Medicaid managed care subsidiary in 2012. Partners was hit with a nursing strike and expenses related to implementation of a new EHR system.

NYC Health + Hospitals cuts 476 positions amid financial pressure

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http://www.healthcaredive.com/news/nyc-health-hospitals-cuts-476-positions-amid-financial-pressure/444136/

Dive Brief:

  • NYC Health + Hospitals on Friday cut 476 management positions, which will reduce the current six layers of managers to four and is expected to save the health system $60 million, several news outlets reported.
  • The largest U.S. public health system cut 396 managers and eliminated 80 unfilled positions.
  • The system expects the job cuts to lead to $60 million in savings in fiscal year 2018.

Dive Insight:

The announcement of the health system’s massive restructuring day came after a $673 million loss was posted for Q3 2017. H+H interim President and CEO Stanley Brezenoff said in a statement the restructuring will reduce “unnecessary layers of management.” The health system will now be able to “better direct resources where we need them most —  at the front line of patient care.” It also cut 70 employees in February.

Revenue increased by 1.8% to $6.7 billion during the third quarter. Yet system officials said net patient service revenues dropped by 9%. The reasons behind the drop were “lower payments from the disproportionate share hospital (DSH) and upper payment limit programs,” according to the healthcare system of 11 hospitals.

At that time, H+H predicted that it would cut its $779 million budget gap this year and end with $185 million cash in hand. In April, the health system announced a redesign of its management structure after losing $776 million for the first half of FY 17, but said at that time that they did not expect layoffs.

Hospitals are facing financial issues across the country. Safety net hospitals like H+H may soon face even more difficulties. H+H has a large Medicaid population and potential cuts in President Donald Trump’s budget and the American Health Care Act – the GOP’s proposed bill to replace the Affordable Care Act – could send millions off of Medicaid. This would mean a system like H+H may soon face more uncompensated care.

H+H is looking for ways to improve its finances. One way is through a new Epic revenue cycle system that officials in May said will “improve efficiency and ensure that the health system is collecting the maximum amount of revenue for the services it delivers.” They expect it will improve clinical documentation, reduce claims denials and accelerate reimbursements.