As financial losses mount, the Philadelphia-based health system joins others across the industry in cutting staff to manage rising costs.
Jefferson Health is laying off about 1% of its workforce as part of a restructuring effort to address ongoing financial challenges.
The cuts, which are expected to affect between 600 and 700 of the 65,000 workers that make up the Philadelphia-based health system, are part of Jefferson’s strategy to manage persistent cost pressures amid growing financial losses. The system did not disclose what positions will be impacted or when the layoffs will take effect.
“Like many organizations in healthcare and higher education, we are facing significant financial headwinds,” Joseph Cacchione, CEO of Jefferson, said in a statement. “To sustain our mission and continue serving our communities, we must take thoughtful, strategic actions to align our operations for the future. While these decisions are never easy, they are necessary to ensure Jefferson remains strong and able to invest in expanding access to care, advancing innovation and supporting those who rely on us most.”
This is the second time this year that Jefferson has planned for staff reductions, with the system previously outsourcing 171 back-office roles in January.
For fiscal year 2025, Jefferson recorded an operating loss of $196 million, a downturn from the $1.3 million in profit reported in 2024. The earnings included 11 months of finances from Lehigh Valley Health Network, which Jefferson merged with in August 2024.
The system attributed much of the 2025 losses to its insurance business, citing rising GLP-1 pharmaceuticals and medical expenses, contributing to a $170 million loss, compared to a $100 million gain in 2024.
Though Fitch Ratings affirmed Jefferson’s “A” rating earlier this month, the agency revised its outlook rating for the organization from “stable” to “negative.”
Fitch’s commentary noted that Jefferson is dealing with operational pressures but forecasted a “measured recovery over the next 24-36 months” and improvements stemming form the Lehigh Valley Health Network union.
“Overall, Fitch expects TJU's financial profile to remain adequate at the current rating as performance normalizes and unrestricted liquidity accretes to fund planned capital,” Fitch wrote. “Further upside to balance sheet metrics is possible if capex is lower than modeled or operational gains outpace plan over the near to intermediate term.”
Jefferson’s workforce reductions are the latest in a trend across the industry as systems nationwide tighten operations in response to financial challenges.
In September, Memorial Sloan Kettering Cancer Center announced plans to cut about 2% of its staff to close a $200 million budget gap.
Other large organizations, such as Providence, have implemented workforce reductions or administrative restructurings over the past year, often targeting non-clinical and support roles to protect patient-facing care.
Jay Asser is the CEO editor for HealthLeaders.
KEY TAKEAWAYS
Jefferson Health is eliminating roughly 600–700 positions in its second round of staff reductions this year.
The health system reported a $196 million operating loss for fiscal year 2025, driven largely by increasing costs for its insurance business.
The move is in line with similar staff cutbacks at other health systems across the country as providers attempt to reckon with financial instability.