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.
Steven Porter is editor at HealthLeaders.