UW Health Cutting Jobs To Hit $80M Target

Health system CEO cites rising costs and declining revenue growth as basis for cuts.

UW Health CEO Alan Kaplan, MD, announced Thursday that the integrated health system will eliminate an unknown number of jobs over the next 18 months as it looks to increase revenue and cut costs by $80 million.

Several factors have backed the system into this financial corner, Kaplan said in a statement, citing an increase in the proportion of UW Health patients who rely on Medicare and Medicaid. Payments from these government-funded programs and others fall short of actual costs, he said, and commercial payers are increasingly reluctant to offset those underpayments.

“We will join many of our peers across the nation in focusing on reducing waste, improving processes and always asking ourselves how we can be better,” said Kaplan, who has led the system based in Madison, Wisconsin, since May 2016.

The news comes after UW Health competitor SSM Health—which operates Madison-based Dean Medical Group and St. Mary’s Hospital—announced earlier this month that it would cut 1% of its workforce, as the Wisconsin State Journal reported. Rather than following suit with across-the-board cuts of its own, UW Health said it would pursue a targeted approach.

Precisely how many jobs will be eliminated as part of UW Health’s plan remains unclear, but system spokesperson Lisa Brunette told HealthLeaders Media that at least 25% of the reduction in expenses is expected to come from labor. That would include the elimination of unfilled positions, natural attrition, and actual job loss, she said.

The Journal reported that UW Health employs the equivalent of about 16,000 full-time workers, with at least 225 of those full-time positions expected to be cut.

The $80 million goal includes expense-reduction and revenue-increases alike, but the system could not provide an estimate Thursday of how much money would come from each category, Brunette said.

Kaplan said UW Health’s first steps to save on labor costs would include reducing its reliance on agency labor, keeping close tabs on overtime, and refraining from filling vacant positions. When jobs are eliminated, the system would help employees move within the organization when possible or to other organizations if necessary, he added.

The system will continue to recruit for positions as needed, Kaplan said.

“We have some very difficult decisions to make in the short term but are also confident in the long-term benefit for our patients and community of an efficient and stable UW Health,” Kaplan said.