U.S. health systems ease IT layoffs, shift to outsourcing

ILLINOIS, UNITED STATES — In the face of mounting financial pressures, health systems in the United States are re-evaluating their approach to managing IT roles.
While layoffs and outsourcing have been common strategies, recent trends indicate a potential slowdown in the rate of job cuts. This shift could signal a strategic realignment as hospitals strive to balance cost reduction with maintaining essential operations.
IT layoffs continue, but at a slower pace
Despite the ongoing economic challenges, a Becker’s report noted that several health systems are still announcing IT layoffs, though the frequency appears to be decreasing.
North Carolina-based Novant Health recently laid off 81 IT employees as part of a broader restructuring initiative. California-based Kaiser Permanente has also conducted multiple rounds of layoffs this year, including over 70 IT roles in July, following an earlier announcement affecting 76 employees across IT and marketing sectors.
RWJBarnabas Health in New Jersey, laid off 79 positions, primarily in time-limited IT training roles, reflecting a broader industry trend of reassessing short-term positions as part of workforce optimization efforts.
Outsourcing gains traction as a cost-saving measure
Outsourcing has emerged as a favored strategy for health systems aiming to manage IT costs while preserving critical functions. Rhode Island-based Care New England has partnered with IT services provider Kyndryl to transfer some tech staff to an external vendor, a move designed to reduce operating expenses while offering career growth opportunities for employees.
Similarly, Tower Health and Franciscan Alliance have outsourced their IT departments, shifting numerous roles to external companies to alleviate financial burdens while ensuring service continuity.
Evaluating the future of healthcare IT roles
While layoffs and outsourcing persist, the pace of IT job reductions seems to be moderating. Bon Secours Mercy Health reported minimal eliminations, with most affected positions being unfilled rather than occupied. This suggests that some health systems are exploring alternative workforce optimization strategies without significant job losses.
As digital transformation and AI tools become increasingly integrated into healthcare operations, IT roles may evolve rather than disappear entirely. The voluntary separation programs at Mass General Brigham exemplify a more measured approach to workforce reductions, allowing health systems to trim excess roles while making room for potential rehires in the future.
This evolving landscape underscores the delicate balance health systems must maintain between cost management and technological advancement as they navigate these challenging times.