Citing changing economic conditions, Sharp HealthCare has announced it will be cutting 315 employees from its payrolls as part of a reduction of 1.5% of its workforce.
The regional nonprofit health system, based in San Diego, will make cuts in mostly nonpatient care departments, it said, but the cuts are occurring across all levels of the organization, including senior executive leadership.
The system is also reducing hours and adjusting roles for certain positions. Most of these positions, said Sharp, are in nonclinical areas of the organization and should have only minimal impact on direct patient care.
"The economic conditions in healthcare have dramatically changed over the last five years, and it has become increasingly clear that Sharp HealthCare is not immune to the related challenges," Sharp HealthCare wrote on its website.
WHAT'S THE IMPACT
Senior executive compensation will be reduced by about 15%, and Chris Howard, Sharp HealthCare's president and CEO, has elected to reduce his compensation by an additional 10%, the system said.
Several expenses in mostly nonpatient care areas will also be reduced so that Sharp can maintain continuity of care.
"Our employees are the heart of our organization, and we value each and every one of them," Howard said in a statement. "We do not make these decisions lightly nor without compassion for those impacted, and we are committed to supporting those affected during this challenging transition with career transition support, severance packages, extended healthcare coverage and other resources to assist them in continuing their careers."
The decision – which Howard called "unfortunate, but necessary" – followed a comprehensive market review and analysis of key financial challenges, both for Sharp HealthCare and for health systems across the U.S.
These include rising costs consistently outpacing revenues because of increasing labor costs; capital expenditures related to state-mandated seismic requirements; and inadequate reimbursement from Medicare, Medi-Cal and commercial payers, according to the health system.
Sharp said there will be no impact on care quality during this time, and that the decision will make it possible for the system to serve the San Diego area into the future.
THE LARGER TREND
Sharp HealthCare is a nonprofit regional healthcare group. It includes four acute care hospitals, three specialty hospitals and three affiliated medical groups. It has approximately 2,700 affiliated physicians and 19,000 employees.
ON THE RECORD
"With the Sharp Experience including exceptional patient care serving as our North Star, we will continue to fulfill our mission of improving the health of those we serve with a commitment to excellence in all that we do," said Howard. "We are grateful for all of our team members, who consistently provide exceptional service to our patients, community members and one another."
Jeff Lagasse is editor of Healthcare Finance News.
Email: jlagasse@himss.org
Healthcare Finance News is a HIMSS Media publication.