Becker's Hospital Review

11 CFO / FINANCE As hospitals make cuts, the losses are loud or quiet By Molly Gamble ere are few easy ways to cut expenses. But in hospitals and health systems, there are quieter ways. Workforce reductions are never painless — or never should be, es- pecially for those doing the reducing. Involuntary job loss is one of the most stressful events workers and families experience, carrying mental and physical health risks in addition to the disruption it poses to peoples' short- and long-term life plans. But as health systems find themselves in untenable financial positions and looming risk of an economic recession, job cuts and layoffs in hospitals and health systems are increasingly likely. In a report re- leased Oct. 18 from Kaufman Hall based on response from 86 health system leaders, 46 percent said labor costs are the largest opportunity for cost reduction — up significantly from the 17 percent of leaders who said the same last year. Job cuts at hospitals may seem counterintuitive given the nation's widely known shortages of healthcare workers. But as hospitals weather one of their most financially difficult years, some are reduc- ing their administrative staff, eliminating vacant jobs and reorganiz- ing or shrinking their executive teams to curb costs. Decisions to reduce administrative labor tend to garner quieter reac- tions compared to budgetary decisions to end service lines or close sites of patient care, including hospitals. While the implications of ad- ministrative shakeups may be felt throughout a health system, the dis- ruption they pose to patients is less immediately palpable. Few people know the name of their community hospitals' senior vice presidents, but most do know how many minutes it takes to travel to a nearby site of care for an appointment during a workday or a tolerable amount of time to wait for said appointment. It doesn't hurt that hospital and health systems' administrative ranks have ballooned compared to their patient-facing counterparts. While the number of practicing physicians in the U.S. grew 150 percent be- tween 1975 and 2010, the number of healthcare administrators in- creased 3,200 percent in the same period. More broadly, administra- tive spending accounts for 15 to 30 percent of healthcare spending in the U.S. and at least half of that "does not contribute to health out- comes in any discernible way," according to a report published Oct. 6 in Health Affairs. A couple of health systems have denoted their plans to cut nonclinical employees and jobs in the past week. Cleveland-based University Hospitals announced efforts to reduce system expenses by $100 million Oct. 12, including the elimination of 326 vacant jobs and layoffs affecting 117 administrative employees. e workforce reduction comes as the 21-hospital system faces a net operating loss of $184.6 million from the first eight months of 2022. Sioux Falls, S.D.-based Sanford Health is laying off an undisclosed number of staff, a decision the organization's top leader says is "to streamline leadership structure and simplify operations" in certain areas, the Argus Leader reported Oct. 19. Bill Gassen, president and CEO of Sanford Health, also said the layoffs primarily affect nonclin- ical areas and that they will "not adversely impact patient or resident care in any way." ese developments are only several days old, but have not yet trig- gered any newsworthy follow-up developments or pushback. Cost re- duction efforts that close facilities or reduce services tend to — on the other hand — catalyze scrutiny, debate and conflict in communities that can span for months and even years. Look to Atlanta. Marietta, Ga.-based Wellstar unexpectedly an- nounced on Aug. 31 that its 460-bed Atlanta Medical Center will end operations on Nov. 1, with plans to progressively wind down services leading up to that date. e system attributed the decision to the $107 million loss incurred operating the hospital over the last 12 months. Noteworthy is that the system has said that 1,430 (82 percent) of At- lanta Medical Center workers affected by the facility's impending clo- sure have accepted job offers at other Wellstar Health System facilities. Since, the decision to close one of Atlanta's level 1 trauma centers has drawn attention from Georgia's governor and gubernatorial candi- date, congressional members and Atlanta Mayor Andre Dickens, who in a town hall Oct. 19 said that in closing Atlanta Medical Center, "Wellstar said they don't want to be in the business of urban health- care." e decision has also spilled over to affect area hospitals, namely At- lanta's public Grady Health System, which received a $130 million cash infusion from the state and reported a 30 percent increase in patient volume aer the emergency department of Atlanta Medical Center closed. Health systems have a lot to weigh. eir administrative layers are thick, varied and necessary to a degree, meaning this broad category of workers still poses tough decisions when it comes to cost contain- ment efforts. But in a very simple view, laying off people who care for patients will only hurt health systems' chances of recruiting and retaining clinical talent — in a time when no health systems' odds of doing so are especially outsized. n Yale New Haven Health selects new CFO By Nathan Tucker Y ale New Haven (Conn.) Health selected Gail Ko- syla as its new CFO, according to a Sept. 28 press release shared with Becker's. Ms. Kosyla has extensive experience in senior roles at several highly respected regional and national health systems and most recently served as the executive vice president of system financial operations at West Or- ange, N.J.-based RWJBarnabas Health, where she has worked since 2019. Yale New Haven Health President and CEO Christopher O'Connor said the organization is delighted to wel- come Ms. Kosyla. "Her extensive experience in healthcare, and in an aca- demic health system specifically, will help us shape the future of our health system in the years ahead. We are fortunate to have recruited someone with Gail's incred- ible talents," Mr. O'Connor said. Ms. Kosyla is a certified public accountant and fellow of the American College of Healthcare Executives. n

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