Why health systems are laying off IT workers

CIOs told Becker's the recent rash of IT layoffs at health systems isn't surprising given the financial challenges in healthcare, but that cutting on the tech side can be short-sighted.

"Each health system has a different set of circumstances that may be hard to see from the outside. Priority shifts and financial distress can happen quickly with limited options — these things happen," said Scott Arnold, chief digital and innovation officer of Tampa (Fla.) General Hospital. "With that said, technology is an enabler for lowering expenses through automation, so IT should not necessarily be the first place to cut in a financial pinch if value can be identified and delivered."

The spate of IT job cuts has included some of the biggest health systems in the country. It also marks a shift from the past few years, when CIOs struggled to fill all the roles they had openings for.

In December, Oakland, Calif.-based Kaiser Permanente slashed 115 IT positions nationwide but told Becker's the move would not affect patient care (the health system has nearly 216,000 employees). Somerville, Mass.-based Mass General Brigham laid off about 20 digital employees as the "tools and technology used to reach patients and support our mission [continue] to evolve," the health system said. Cincinnati-based Bon Secours Mercy Health and Winston-Salem, N.C.-based Novant Health and also recently shed IT staff.

"Firstly, I believe these moves are a result of the continued pressure placed on health systems today to manage costs and do more with less. Secondly, they also demonstrate that IT is still largely considered a cost center," said Joyce Oh, CIO of Tampa, Fla.-based Moffitt Cancer Center. "There is a paradigm shift that still needs to fully manifest in healthcare where technology is viewed as a business driver, an enabler of new capabilities, a new channel for patient acquisition, and a toolbox that can bring about increased efficiencies and economies of scale."

Novant Health, for one, said it is moving some of its digital products and services to an "external partner." Other smaller health systems have also sent IT staffers to work for outside companies in recent months, including Providence, R.I.-based Care New England, Mishawaka, Ind.-based Franciscan Alliance, and West Reading, Pa.-based Tower Health.

Care New England, for instance, outsourced its IT department of nearly 160 employees to IBM spinoff Kyndryl to help with the three-hospital system's transition to Epic and Amazon Web Services.

"I think it's a trend," said Care New England CIO Tom Gregorio. "You're finding more and more organizations like mine wanting to focus their attention on clinical practice, their patients and that growth."

Tom Andriola, vice chancellor for information, technology and data and chief digital officer at UC Irvine (Calif.), said the moves reflect the pressure on margins at health systems mixed with the increased demand on CIOs for the latest digital and data solutions. 

"The orientation toward newer technologies means you have to find greater cost efficiencies in your operational areas in order to have the resource capacity to devote toward innovation," he said.

IT departments also have an opportunity to ease financial pressures on their health systems, such as deploying artificial intelligence for automation, said Michael Restuccia, CIO of Philadelphia-based Penn Medicine. But he said healthcare is still waiting for the next revolutionary technology the likes of speech recognition, the introduction of which drastically saved time and reduced costs on the clinical side.

"Although promising, and many are evaluating multiple AI opportunities, it has yet to generate the results matching the hype," he said. "Time will tell if AI will mature fast enough to generate the promised benefits. Until then, many health systems are already on borrowed time and, as a result, will need to resort to further expense intervention."

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