Virginia Mason Franciscan Health, part of the CommonSpirit Health network, is eliminating 116 jobs and revising its virtual care strategy following passage of the Washington state budget, which officials estimate will cost the hospital $30 million annually.
A Washington health system is cutting 116 employees, many of them in virtual care services, to remain “financially sustainable.”
Virginia Mason Franciscan Health, a Seattle-based, 1,500-bed health system affiliated with CommonSpirit Health, announced the job cuts, which will affect some 200 people in total and close an office in Tacoma, on Thursday. In a letter to the public, officials said the hospital is “realigning resources and improving operational efficiency.”
Officials cited “significant financial pressures” for the realignment, in particular a new Washington state budget that would add new taxes and reduce reimbursements for care provided to state and school employees. Officials said the changes are expected to cost the health system an additional $30 million a year.
“To protect access to care long term, we are realigning resources and improving operational efficiency,” the letter reads. “This includes transitioning several virtual services and administrative functions, which will impact approximately 200 team members. Affected employees have been notified and are receiving personalized support, including placement assistance and access to open roles within our organization.”
The impact of the 2025-27 budget, which was approved in April, is being felt by hospitals across Washington. It includes, among other things, $100 million in cuts per year to hospital payment rates in public and school employee healthcare contracts, a 1% reduction in Medicaid managed care organization contracts, and the elimination of several post-acute and long-term care programs.
On top of state cuts, health systems and hospitals are eyeing potential federal cuts to Medicare, as well as the September 30 expiration of several pandemic-era waivers that expanded the scope and coverage of telehealth services that receive Medicare reimbursement.
Telehealth advocates have warned that hospitals would curtail or even cancel virtual care programs and strategies if those waivers were not extended or made permanent.
Eric Wicklund is the associate content manager and senior editor for Innovation at HealthLeaders.
KEY TAKEAWAYS
The Washington state biennial budget, passed in April, includes more than $100 million in annual cuts to healthcare funding.
Virginia Mason Franciscan Health leadership issued a letter this week announcing a realignment in some services to remain “financially feasible.” The cuts affect about 200 people, 116 of which are losing their jobs, and the closure of a Tacoma office.