Issue link: https://beckershealthcare.uberflip.com/i/1497584
20 CEO / STRATEGY Penn Medicine eliminates administrative jobs in cost-cutting move By Kelly Gooch P hiladelphia-based Penn Medicine is eliminating administrative positions as part of a reorganization plan to save the health system $40 million annually, the Philadelphia Business Journal reported March 13. Kevin Mahoney, CEO of the University of Pennsylvania Health System, told Penn Medicine's 49,000 employees last week that changes include the elimination of a "small number of administrative positions which no longer align with our key objectives," according to the publication. e memo did not indicate the exact number of positions that were eliminated. Mr. Mahoney did note, though, that "many" affected workers will move into other roles within Penn Medicine, according to the Philadelphia Business Journal. He said others will be offered coaching and support to help them find jobs outside of the health system. Amid today's financial challenges, Penn Medicine is also taking steps to boost revenue, such as renegotiating vendor contracts, standardizing technologies, consolidating enterprisewide corporate services and eliminating duplicative administrative systems, Mr. Mahoney said, according to the Philadelphia Business Journal. According to the publication, he wrote in his memo: "e nation's healthcare economy has been completely reshaped by the effects of the COVID-19 pandemic, bringing monumental changes unlike anything we've seen in our lifetime. We have planned carefully to ensure that our organization can withstand these turbulent market forces, but we are not immune to their impact. "As a result of your continued dedication to our mission, we remain one of the few health systems in the region that continues to have a positive operating margin. We continue to reinvest that margin in our workforce, including a planned pay raise for UPHS employees later this spring. However, like health systems across the nation, inflation- related costs have contributed to expenses that outpace our earnings. Our leadership teams at both the system and entity level are working together, leveraging 'One Penn Medicine,' to ensure the stability of our organization to deliver world-class care far into the future." e changes come as Penn Medicine reported $118 million in net income for the six months ending Dec. 31 as revenues increased to almost $5 billion. Operating income for the 2022 period totaled $103.6 million compared to $152.5 million in the same period in 2021. Mr. Mahoney also recently said that the health system's expansion has been hampered by "huge macro headwinds." Penn Medicine's planned construction projects include a women's health pavilion, an ambulatory care center, a cancer center and more outpatient care centers. n HCA's 5 highest-earning executives By Alexis Kayser In 2022, one of HCA Healthcare's highest-earning executives was also its newest. Nashville, Tenn.-based HCA Healthcare is one of the largest health systems in the United States, operating 184 hospitals across 21 states and the United Kingdom. In 2022, the for- profit system posted $5.64 billion in net profit on $60.23 billion in revenue — dipping from $6.96 billion in income on $58.8 billion in revenue the year prior. HCA executives' pay packages were determined using a sample group of large public healthcare companies — including Anthem, Centene, Eli Lilly and Pfizer — according to a proxy statement filed March 10. To determine the competitiveness of compensation for Michael McAlevey, who joined HCA as chief legal officer in early 2022, business management consulting firm Semler Brossy collected and reviewed data from the Willis Towers Watson Executive Compensation Database and Radford Global Compensation Database. HCA's compensation committee also considered factors unique to each individual — including projected responsibilities for the coming year, projected or actual impact on successful strategy execution, and experience — to determine each executive's pay, including Mr. McAlevey's. Aside from Mr. McAlevey, who did not join the team until 2022, every named executive took a pay cut from 2021. The following figures reflect their total compensation, including salary, bonus, stock awards and other benefits: 1. Samuel Hazen, CEO: 2021: $20.6 million 2022: $14.6 million 2. Michael McAlevey, senior vice president and chief legal officer: 2021: No data available 2022: $6.5 million 3. William Rutherford, executive vice president and CFO: 2021: $7.2 million 2022: $5.1 million 4. Charles Hall, president of national group: 2021: $5.6 million 2022: $5 million 5. Jon Foster, president of American group:* 2021: $6 million 2022: $4.1 million *Mr. Foster was promoted to executive vice president and COO of HCA Healthcare, effective Jan. 1, 2023. n