The move comes amid a series of changes for the health system as it pursues financial sustainability.
Rhode Island-based Lifespan has targeted the executive level for layoffs to save on rising expenses.
The hospital operator has shed 20% of its executive roles, allowing it to save $6 million in fiscal year 2025, according to a statement from Lifespan president and CEO John Fernandez.
"Lifespan implemented a strategic restructure focused on creating a one-system, one-team approach, designed to reduce executive overhead and streamline operations," Fernandez said in the statement. "Starting from the top like this allows us to allocate more resources directly to patient care and support areas."
Lifespan didn’t provide details on which positions will be affected by the restructuring.
The organization turned around its bottom line in fiscal year 2023 by posting $8.6 million in operating income and $37.1 million in net income, compared to a $76 million loss and $186.8 million deficit in 2022, respectively.
Nevertheless, Lifespan continues to deal with increased expenses, largely driven by labor costs. For the nine months ended June 30, the operator saw total operating expenses increase by $253.3 million (10.9%), with compensation and benefits jumping $107.4 million (7.7%). Compensation and benefits costs were spurred by the system adding 421 FTEs, creating an expense of $39.3 million.
As hospitals and health systems pour more resources into their clinical workforce, executive layoffs allow organizations to slash sizeable salaries without eliminating large quantities of staff.
For Lifespan, the decision comes on the heels of the system announcing in June that it will rebrand to Brown University Health in exchange for a $150 million investment over seven years from Brown University.
Lifespan is also acquiring two Massachusetts hospitals from Steward Health Care after announcing the move in August and receiving court approval for the sale earlier this month. The $175 million deal brings Fall River-based St. Anne’s Hospital and Taunton-based Morton Hospital under Lifespan’s control.
Jay Asser is the CEO editor for HealthLeaders.
KEY TAKEAWAYS
Lifespan president and CEO John Fernandez said the organization has trimmed 20% of its executive team to save $6 million in the coming fiscal year.
Though Lifespan’s finances have rebounded in the past year, its total operating expenses continue to rise, largely due to compensation and benefits going up.
The nonprofit also announced a rebrand to Brown University Health and a purchase of two Massachusetts hospitals from Steward Health Care.