Health systems shrink executive teams as costs rise

Hospitals and health systems are facing financial challenges with many reporting rising expenses and significant investment losses this year. 

This year is shaping up to be the worst year financially for hospitals and health systems since the beginning of the COVID-19 pandemic. Hospitals are reporting some of the worst margins since the pandemic began, and there isn't federal relief aid available to offset the damage, according to a report by Kaufman Hall. 

What are hospitals and health systems doing to improve their financial positions? Identifying ways to boost revenue cycle performance, scaling back services, and layoffs are a few ways healthcare organizations are trying to address financial challenges. A few health systems are streamlining their executive teams to cut costs. 

Providence, a 51-hospital system, announced in July that it is shrinking its leadership team and rolling out a new divisional structure. 

"Creating a more sustainable model of health care by 2025 has been a key part of our vision since before the pandemic," Providence CFO Greg Hoffman said in an Aug. 15 earnings release. "But it has become even more imperative today as health systems across the country face a new reality. Alongside our investments to simplify processes and modernize technology, streamlining our leadership and administrative structure is another way we will ensure we are operating as efficiently as possible, so that we can keep resources focused on direct patient care, especially for those who are most vulnerable." 

Providence, which has system offices in Renton, Wash., and Irvine, Calif., ended the first two quarters of this year with an operating loss of $934 million, compared to an operating loss of $94 million in the same period a year earlier. 

Bend, Ore.-based St. Charles Health System eliminated two executive positions in July as part of a financial recovery plan. To cut costs, the system laid off its chief physician executive and senior vice president of improvement and strategy. The health system is also looking for other ways to reduce expenses and enhance revenue to improve operating performance, according to financial documents released in August. 

For the first six months of this year, St. Charles Health System reported an operating loss of $43.3 million, compared to operating income of $14.5 million in the same period a year earlier.

Copyright © 2022 Becker's Healthcare. All Rights Reserved. Privacy Policy. Cookie Policy. Linking and Reprinting Policy.

 

Featured Whitepapers

Featured Webinars