Becker's Hospital Review

13 CFO / FINANCE 'Quiet cutting' in hospitals: Outsourcing may be 1 example By Erica Carbajal A t least 80 hospitals and health systems have laid off workers in 2023 amid ongoing financial and operational challenges. With such challenges expected to continue for the foreseeable future, healthcare may be leaning into a new workforce trend to avert more hard layoffs: "Quiet cutting." In an Aug. 27 article, e Wall Street Journal reported on the trend in which companies avoid hard layoffs but still cut jobs by reassigning employees to different roles. From August 2022 to 2023, mentions of "reassignment" or similar terms more than tripled in company earnings calls. Executive coaches and advisors told the Journal that in many cases, reassignments can be a way for companies to avoid letting people go by offering them new roles that are better suited to meet organizational goals. In other cases, the motive is instead a so nudge to get employees to quit by offering them new roles far below the pay and experience level of their original job, which then allows employers to avoid paying out severance or unemployment benefits. Outsourcing may be one way the trend is showing up in the healthcare industry. In July, Greenville, S.C.-based Prisma Health entered into a partnership with Compass One to provide environmental services, affecting 689 jobs. A press release on the outsource said all employees working in environmental positions were given "an opportunity to become part of Compass One" and that "no positions will be eliminated," though there were no details on what would change for those choosing to stay on with Compass One. Earlier in August, Burlington, Mass.-based Tus Medicine filed WARN documents indicating it plans to eliminate 574 jobs by outsourcing its outreach laboratory business and some operating assets to Labcorp. e agreement is expected to be finalized in October, and the health system previously told Becker's it plans to have the majority of laboratory employees receive comparable job offers through Lapcorp. Meanwhile, at least two hospitals and systems have said they plan to outsource IT jobs to reduce operating costs in recent weeks: Providence, R.I.-based Care New England recently said it would outsource some of its IT employees to health IT provider Kyndrel. In July, Franscican Alliance, the parent company of Mishawaka, Ind.- basd Francican Health Indianpolis said it plans to move 61 employees from its information services department to an outside company. n The 3% raise is no longer enough By Kelly Gooch S tandard annual pay raises of years past will no longer suffice as workers expect higher pay raises from their employers in 2024, Fortune reported Aug. 7, citing data from Payscale's Salary Budget Survey. In 2022, respondents planned on base salary increases of 3.8 percent, on average, in the U.S. for 2023, although actual salary increases for 2023 were 4 percent, according to Payscale's survey. Moving into 2024, organizations again are planning on the same increases. Payscale clients and contacts were invited to participate in the survey, which was conducted in May and June, resulting in 1,757 usable submissions. Respondents include various healthcare participants, such as Oakland, Calif.-based Kaiser Permanente; Marshfield (Wis.) Clinic Health System; the American Medical Association; Gainesville, Fla.-based UF Health Shands Hospital; and UnitedHealth Group, among others. Respondents were asked to submit data for U.S., Canada and selected international locations for non-exempt employees; exempt (non-management) employees; managers; and officers and executives. "Given cooling market conditions and easing fears of a recession, this prediction [of 3.8 percent] may be closer to the truth in 2024 as organizations strive to achieve equilibrium," Payscale's report states. "Unsurprisingly, a strong majority of organizations (78 percent in the United States and 81 percent in Canada) predict that their salary increase budget will be either higher than in 2022 or the same as in 2022, with the top cited reason being competition for labor. In fact, pay raises slightly over 3 percent may become the new normal." However, decisions on raises are more complex than following the national average increase number, Ruth Thomas, a pay equity strategist at Payscale, cautioned, according to Fortune. Ms. Thomas noted that expected raises vary by geography and industry. In U.S. hospitals, exempt (non-management) employees are expected to see a 3.2 percent salary increase in 2024. n

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