Up to 400 Novant Health employees – or 2 percent of the hospital system’s workforce – will be laid off in coming days as part of a reorganization that began last fall.
The changes became public Monday as officials of the Winston-Salem-based system began talking with Charlotte-area employees about potential reassignments as some positions are eliminated. Some changes are effective immediately, but others will be made in the next 45 days.
Officials said they could not estimate the impact on the Charlotte market, which includes Presbyterian Medical Center, Charlotte Orthopaedic Hospital, Huntersville Medical Center and Matthews Medical Center as well as numerous physician practices and outpatient centers. “We didn’t break it out by market,” said spokeswoman Caryn Klebba.
“This isn’t simply about cost cutting,” she said. “This is about operational precision.” Klebba said the system is also recruiting for more than 1,000 positions as some new jobs are created and other processes are streamlined and standardized. For example, she said the system is adding nurses in many areas and making changes to manage fluctuating patient volumes.
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Novant Health employees will be reassigned or given the chance to apply for open positions elsewhere in the system, Klebba said. Teams will spend the next 45 days on that process, and eventually up to 400 people will need to seek employment outside the system, she said.
Despite the layoff announcement, officials said the system is “financially healthy and strong today.” In April, Novant Health’s year-end report showed it generated a profit of $201.8 million last fiscal year, a 26 percent drop from the year before. The system has annual revenues of $3.8 billion and 26,000 employees across North Carolina, South Carolina, Georgia and Virginia.
In a written statement, Novant Health said the reorganization is the result of a “proactive and thoughtful process” that began last fall to “redesign the way the organization works to achieve greater operational precision, enhance quality outcomes and help provide remarkable, affordable care for patients.”
The changes were necessary because of “declining reimbursements and many other challenges facing the healthcare industry today,” the statement said. “Teams across the organization have worked together to standardize processes which will improve patient quality and safety outcomes, patient satisfaction and achieve financial savings to ensure Novant Health’s long-term financial stability.”
“This is an operational balancing of our workforce,” the statement said. “…Redundancies have been reduced and standardization in many areas of the organization has been applied.”
In recent years, many hospitals across the country have announced reductions in force amid falling insurance payments and inpatient visits. In September 2013, for example, U.S. health care providers announced more than 8,000 layoffs, more than any other industry that month, largely because of reductions by hospitals, according to the outplacement firm Challenger, Gray and Christmas.
Several academic medical centers, including the Cleveland Clinic, Indiana University Health and Vanderbilt University Medical Center, announced cutbacks that year. John Howser, an assistant vice chancellor at Vanderbilt, said one of the factors there was that Tennessee lawmakers – like those in North Carolina – refused to accept federal Medicaid expansion, thus leaving many low-income citizens uninsured.
As part of the Affordable Care Act, Medicare and Medicaid programs are steadily reducing reimbursements to hospitals. And as government payments decline, commercial insurers “begin to follow suit,” Howser said. “All of those things can factor into needing to make an adjustment.”
After reading about Novant Health cuts, Howser said he could see “definite similarities. … They’re just a couple of years behind where we were. …They’re trying to do a bit of right-sizing.”