IT job cuts sweep through health systems

Health systems across the nation are laying off IT workers as they outsource technology functions and aim to cut costs. 

Oakland, Calif.-based Kaiser Foundation Hospitals has announced two rounds of layoffs this year. In March, more than 70 employees, primarily in IT roles, were laid off. By May, another 76 workers in California, including those in IT and marketing, faced layoffs. 

Kaiser attributed these cuts to broader organizational cost-reduction efforts.

These layoffs come despite Kaiser reporting an increase in operating income for the first quarter, reaching $935 million, up from $233 million in the same period last year. The operating margin improved from 0.9% in the first quarter of 2023 to 3.4% in Q1 2024. 

For the quarter ending March 31, Kaiser's health plan, hospitals and subsidiaries generated $27.4 billion in operating revenues and $26.5 billion in operating expenses, up from $25.2 billion and $25 billion, respectively, in Q1 2023. However, Kaiser noted that its operating income was still below pre-pandemic first-quarter trends, citing ongoing cost pressures such as high utilization, care acuity, and rising costs of goods and services.

Winston-Salem, N.C.-based Novant Health has also announced IT layoffs. 

In June, the health system revealed it would lay off 81 IT workers following its decision to revamp its IT model in 2023. A Novant Health spokesperson told Becker's in June that the layoffs were a result of transitioning additional DPS functions to Deloitte Digital, which would reduce the system's reliance on other external partners by more than 90%. 

"These changes allow us to scale our resources so we can continue our investment in creating a healthier future for the people and communities we serve," the Novant spokesperson said. "DPS team members will see adjustments in their roles and responsibilities because of this change, while other roles are being phased out."

The wave of IT layoffs in health systems occurs as IT unemployment continues to rise. 

IT consulting firm Janco Associates reported that the IT unemployment rate stood at 5.9% in June, up from 3.1% a year earlier, attributing the increase to some jobs being replaced by artificial intelligence.

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