Middletown, N.Y.-based Garnet Health announced a restructuring plan June 17 that includes workforce reductions, outpatient service closures and leadership changes — a move the health system says is necessary to remain financially sustainable amid ongoing reimbursement pressures.
The restructuring will affect 42 employees — less than 1% of Garnet Health’s workforce — and involves the discontinuation of two outpatient services that have experienced consistent underutilization:
- Outpatient pulmonary rehabilitation at Garnet Health Medical Center
- Outpatient diabetes services at both Garnet Health Medical Center and Garnet Health Medical Center-Catskills
Garnet Health Medical Center’s trauma program will also transition from a Level II trauma center to a Level III designation — a change the system says reflects current utilization patterns and will better align with its long-term sustainability goals and the community’s needs.
“Without question, the healthcare climate continues to be challenging, with no immediate signs of reprieve,” Garnett Health President and CEO Jonathan Schiller said in a news release. “And due to shrinking federal reimbursements, as well as additional anticipated federal cuts to the Medicaid program, we are faced once again with very difficult decisions.”
As part of the restructuring, Izabela Nowosielski, MD, has stepped down as president of Garnet Health Doctors. Effective immediately, Jerry Dunlavey will assume the role of CEO of Garnet Health Doctors in addition to his existing roles as CEO of Garnet Health Medical Center-Catskills and vice president of operations for Garnet Health. Pamela Murphy, MD, will take on the role of president of Garnet Health Doctors while continuing to serve as the health system’s chief medical officer.
Mr. Schiller emphasized that the restructuring is not a reflection on individual performance.
“I share this news with a deep and personal sadness,” he said. “This restructuring and reduction in force is in no way about the performance of individuals. Instead, it is the direct result of diminishing federal reimbursement and cuts impacting Garnet Health’s current and projected financial sustainability.”
All affected staff have been notified, and severance packages were offered to eligible employees. Garnet Health said it remains focused on positioning itself for long-term stability.
“To keep operations at an optimum performance level, we had to carefully weigh what would make the biggest impact on the health system’s financial well-being while ensuring the smallest impact to our patients, their families and the communities we serve,” Mr. Schiller said.
The health system reaffirmed its commitment to strengthening its financial footing and continuing to serve its communities with resilience and compassion.
Garnet Health implemented layoffs and operational restructuring in June 2024, affecting 26 employees, including individuals in management roles. This followed a similar move in July 2023, when the health system laid off 49 employees — 25 of whom held leadership positions — as part of broader efforts to mitigate operating losses.
