Hospital layoffs surge across U.S. healthcare systems amid Q4 financial strain
CHICAGO, UNITED STATES — Health systems across the United States are facing significant financial challenges, leading to a surge in workforce reductions in the fourth quarter of 2024.
Persistently high labor and supply costs, coupled with declining operating margins, have pushed many hospitals to make tough decisions to stabilize their finances.
According to Kaufman Hall’s National Hospital Flash Report, while operating margins have shown some improvement this year, nearly 40% of hospitals are still operating at a loss.
The layoffs are not limited to front-line staff but extend to leadership positions as health systems restructure operations for efficiency. These changes aim to address immediate financial pressures while positioning organizations for long-term sustainability.
Leadership changes and organizational impact
Several health systems have targeted administrative and leadership roles in their layoffs:
- UNC Health laid off about 40 leadership-level employees, representing less than 2% of its leaders, as part of a shift toward a more sustainable leadership structure.
- Indiana University Health is reducing six regions into four, eliminating approximately 100 nonclinical leadership positions while creating new roles aligned with growth plans.
- Baystate Health cut 134 leadership positions to reverse $300 million in losses and streamline decision-making processes.
These moves reflect a broader trend of rethinking organizational structures to enhance efficiency and reduce costs.
Outsourcing gains traction post-layoffs
In addition to workforce reductions, some health systems are turning to outsourcing as a cost-saving measure:
- UPMC reportedly outsourced customer service roles to the Philippines following layoffs earlier this year.
- Bassett Healthcare Network partnered with Optum to outsource IT and revenue cycle management operations after eliminating 100 administrative jobs.
- Emanate Health, which recently announced 107 layoffs, has also turned to outsourcing as part of its restructuring efforts.
These moves reflect a growing trend among health systems to leverage external partnerships for nonclinical functions while focusing internal resources on patient care.
Operational realignments
Some health systems are centralizing their services as part of their restructuring efforts. For instance, Westchester Medical Center Health Network (WMCHealth) eliminated 130 corporate and administrative roles while appointing full-time leadership at each hospital to centralize services and leverage network-wide strengths.
Similarly, McLaren Health Care is closing its long-term acute care hospital, McLaren Bay Special Care, and transitioning to a multispecialty outpatient campus. Affected employees are being offered other positions within the organization.
A balancing act for future growth
Health system leaders are navigating a delicate balance between addressing immediate financial pressures and preparing for future growth.
Dennis Murphy, CEO of Indiana University Health, explained, that the goal is to “bolster clinical care models” while investing in technology and workforce development.
While some organizations are turning to outsourcing or centralization to reduce costs, others remain focused on internal restructuring. The coming months will reveal whether these strategies can deliver the financial resilience needed in an increasingly challenging healthcare environment.
