Lahey Health Lays Off 75 in Burlington; Symptom of a Healthcare Trend?

Lahey Health layoffs
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Lahey Health Systems announced it is letting nearly 75 staff members go to get its expenses in order as it deals with mixed patient volumes and higher expenses. Burlington, Massachusetts-based Lahey Health said the layoffs will be permanent and take place later this fall.

Lahey Health Systems manages hospitals, physicians, and other health services in Massachusetts. The hospital system, which employs around 14,500, has more than 75 primary care practices in over 30 communities.

Lahey Health Lays Off Nearly 75 Employees 

In an effort to slash expenses and close a budget gap, Lahey Health is axing 75 jobs. The announcement comes as Lahey Health pursued a merger with Boston-based Beth Israel Deaconess Medical Center.

New England Baptist Hospital, also in Boston; Mount Auburn Hospital in Cambridge; and Anna Jacques Hospital in Newburyport later joined the deal. The merger, when complete, will be the biggest Massachusetts hospital deal in decades.

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Chris Murphy, a spokesperson for Lahey, said the job cuts were fueled by a need to “constantly look for opportunities to be more efficient.”

“This has nothing to do with the planned affiliation,” he said. “It’s a challenging time for health care.”

This is especially true for health service providers in Massachusetts, where the cost of healthcare remains higher than any other state in the country.

Most of the terminations are in administrative and management roles and do not involve those who work directly with patients. Those who have lost their jobs are free to apply for other openings at Lahey, Murphy said. It runs hospitals in Beverly, Burlington, Gloucester, and Winchester.

Employees were notified about the layoffs in a memo sent out by Lahey’s CEO, Dr. Howard Grant.

“It is the best way for us to rebalance our system, positioning ourselves to grow in response to the changing needs of our community and the external healthcare environment,” Grant said. “This reduction will not impact our ability to care for our patients or our commitment to quality and safety.”

Declining Inpatients & Operating Losses Results in Job Cuts

Lahey desperately needs to “rebalance” its systems. For the six-month period ended March 31, it reported an operating loss of $37.3 million, a massive increase over the $3.3-million operating loss reported in the six-month period ended March 31, 2016.

The huge increase in operating loss results from increased expenses that trumped revenue growth. During the six month period, Lahey saw inpatient discharges increase a modest 1.4% and length of stay increase 1.8%. This was offset though by its outpatient volumes. Emergency visits decreased by 0.9% and ambulatory surgical cases slipped by 4.5%.

Even though operating revenue inched up 1.3% year-over-year to $1.01 billion in the six month period, its expenses also increased at a much greater rate. Operating expenses soared 4.7% year-over-year to $1.04 billion. The health system attributed the rising expenses on salaries and benefits and supply and pharmaceutical costs.

This is not the first time Lahey Health has had to gut staff in order to close a budget gap. In 2015, the company jettisoned 130 employees at three hospitals and cut the pay of its top executives. For the six months ended March 31, 2015, Lahey reported a loss of $21.0 million. During the same period in 2014, it reported an operating profit of $53.0 million.

Broader Healthcare Layoffs in September 2017

Lahey Health is just one of a growing number of healthcare facilities that have had to gut staff in order to get expenses under control. Boston-based Brigham and Women’s Hospital offered buyouts to about 1,200 employees. Meanwhile, Southcoast Health System of New Bedford offered buyouts to 372 employees.

Most recently, this past September, Chicago, Illinois-based Outcome Health laid off dozens of employees. While the exact number remains undisclosed, the company only has a staff of just over 600. A layoff that affects 36 people would result in a loss of six percent of its total workforce.

Molina Healthcare, Inc. (NYSE:MOH) eliminated almost 400 jobs in September; all of the layoffs are permanent. The job cuts come after the company reported a second-quarter loss of $23.0 million. Company CEO Joseph White said the company is, “taking aggressive, urgent and determined actions to improve [their] financial performance.”

And finally, a repeal of the Deferred Action for Childhood Arrivals (DACA) could seriously damage the healthcare field in the U.S., where thousands of DACA recipients are employed.

Of the 700,000 DACA recipients, roughly one-fifth work in the healthcare and educational industries. When the first DACA permits begin to expire, these workers will no longer be legally eligible to work. This will immediately lead to a vacuum of tens of thousands of job vacancies in hard-to-fill healthcare positions.

 

Sources

Lahey Health is laying off about 75 employees,” The Boston Globe, October 3, 2017.

Lahey Health,” laheyhealth.org, last accessed October 5, 2017.

Beth Israel and Lahey Health sign final agreement to merge,” The Boston Globe, July 13, 2017.

Lahey Health Systems Financial Statement and Discussion for the Six Months Ended March 31, 2017,” Becker’s Hospital Review, last accessed October 5, 2017.

Lahey Health to lay off 130 workers at three hospitals,” The Boston Globe, May 20, 2015.

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