Restructuring to Result in Tenet Layoffs
The Detroit Medical Center is reportedly cutting its workforce by 150 jobs before the new year, part of the for-profit hospital complying with parent company Tenet Healthcare Corp (NYSE:THC), which called for Tenet layoffs to reach 1,300 across the company.
While officials did not provide local news outlets with exact figures regarding the layoffs, Modern Healthcare claims that three sources speaking under anonymity said the Detroit Medical Center job cuts will amount to 150.
Many of the cuts are said to be among management, with the intent of reducing the distance between top executives and the hospitals themselves.
Detroit Medical Center employs over 12,000 people in the area and operates seven hospitals.
One high-ranking executive among the company, CFO Victor Jordan, parted ways with Detroit Medical Center earlier last month.
Other employees shed in the Detroit Medical Center job cuts include many in the quality control department, which has caused concern among doctors and nurses as to how the already lean hospital will cope.
Many of the cuts are coming in departments that have seen poor profit margins and low volume.
Rising drug prices have also made the hospital consider outsourcing its outpatient pharmacy to bigger chains that operate across the country.
This is the second round of Detroit Medical Center job cuts to hit in recent months, with 22 jobs having been eliminated over the summer.
Much of this is because of the Tenet layoffs mandate as well as the parent company’s overall financial woes.
The 1,300 Tenet layoffs were announced in October as the company is looking to reduce its costs by $150.0 million.
“We believe that this new structure will empower all of us to perform better and will result in more efficient processes, greater support and service to local operations, faster decision-making and sustained cost savings,” Eric Evans, Tenet hospital operations president, said in the memo. “I am confident that we will be able to accelerate our strategic growth priorities to better meet the needs of our patients, physicians and communities.”
Tenet has been locked in a battle to right the ship for over a year now, as the company saw its stock price decline from near $60.00 in 2015 to less than a quarter of that value today at about $13.00.
The company operates 70 hospitals around the country, with rumors that several of them may be up for sale as it seeks ways to reduce costs and regain some of its lost value.
The Tenet layoffs are also taking place as the executive team is being churned. CEO Trevor Fetter resigned in October following pressure from major stockholder Glenview Capital Management, which is lobbying the company for more restructuring, sales, and cost-cuts in order to revitalize Tenet’s stock value.
The Tenet layoffs are also directly tied to the company’s disappointing financials. It reported a net loss of $366.0 million in the third quarter of this year.
Detroit Medical Center registered $138.4 million in net income in 2016, but earlier reports showed that the hospital is lagging behind in terms of surgical volumes and admissions compared to last year.
The hospital also fell short of financial targets through the first six months of 2017.
The healthcare industry as a whole is still finding ways to cope with a variety of obstacles in 2017, from the political talk of repealing the Affordable Care Act to rising expenditures.
Across the nation, people are concerned with rising premiums, a potential loss of the ACA subsidies, and other factors keeping them away from the doctor, thus lowering hospital revenue.
Meanwhile, the work hospitals are doing is becoming more expensive, reducing hospitals’ bottom lines and making it more difficult than ever to turn a profit—or even balance the budget.
“DMC cutting jobs as part of Tenet cost-cutting,” Modern Healthcare, December 4, 2017.
“CEO resignation is latest shakeup at DMC parent company Tenet,” Crain’s Detroit Business, October 25, 2017.