Beaumont Health and Spectrum Health, now BHSH System, plan to cut 400 jobs as the Michigan health system faces “significant financial pressures,” the system told Healthcare Dive.
The 400 jobs are management roles and do not include direct patient-facing roles or health plan member-facing roles, according to a statement from the system. The cuts represent less than 1% of the health system’s workforce, which employs 64,000 people.
“Our health system, like others around the nation, is facing significant financial pressures from historic inflation, rising pharmaceutical and labor costs, COVID 19, expiration of CARES Act funding and reimbursement not proportional with expenses,” the system said.
Analysts have warned that the operating environment for nonprofit hospitals is deteriorating. Fitch Ratings revised the sector outlook from stable to negative recently.
Hospitals across the country continue to face disruption to patient volumes while expenses remain elevated due to pricier labor among other cost items.
BHSH’s financial results for the first half of the year fell short of the new system’s projections, according to its consolidated results.
BHSH’s operating income, including state and federal funding, was about $120 million for the first half of the year, falling short of its $156 million projection. The legacy Beaumont Health division posted an operating loss of $96 million through June 30, while Spectrum Health division posted operating income of about $140 million, and exceeded earlier projections.
Detailed in its results, the system said “in order to get back on track, leaders are focused on cost containment initiatives as well as length of stay, productivity, access, medical trend management initiatives and acceleration of integration savings.”
The system blamed the weaker financial results on lower volumes and higher staffing costs in its care delivery divisions. Meanwhile, its health plan experienced higher than normal medical and pharmacy trends.
Beaumont and Spectrum merged creating a combined system with $13 billion in annual revenue and 22 hospitals flanking either sides of the state of Michigan. The system also operates a health plan that covers 1 million Michiganders.