Detroit Medical Center plans to cut up to 300 jobs as its parent company, Dallas-based Tenet Healthcare, moves forward with its cost reduction initiative, a source knowledgeable about the matter told Crain's Detroit Business.
Detroit Medical Center CEO Tony Tedeschi, MD, sent a memo to employees Monday outlining the reorganization plan. He said the hospital has already eliminated 14 management positions and plans to cut additional jobs in the near future. He did not specify how many jobs would be eliminated, but said workforce reductions will occur in coming weeks.
"Realistically, we won't be able to place every displaced associate in a new job within the company, but we will make every effort to place as many as possible," Dr. Tedeschi said.
He did not specify which departments would be affected by the job cuts. Three sources familiar with the matter told Crain's Detroit Business support staff and middle managers in several clinical departments, dietary and food service workers, and nursing unit clerks will be affected by the layoffs.
Dr. Tedeschi said several factors led to the changes, including admissions stagnating, patients shifting toward outpatient services, declining government reimbursement and increasing uncompensated care costs.
"As a result of these local and national trends in healthcare, and the challenges they have created, Tenet Healthcare has undertaken companywide plans to meet these new realities head on," said Dr. Tedeschi. "And Tenet is not alone in the healthcare space, as other hospital operators are taking similar actions."
After reporting a net loss in the third quarter of 2017, Tenet launched a $150 million enterprisewide cost reduction initiative, which involved renegotiation of contracts with suppliers and vendors, as well as the elimination of about 1,300 jobs.
In December 2017, the company expanded the cost-cutting plan to $250 million, but did not disclose whether additional jobs would be cut. In a presentation to investors at the J.P. Morgan Healthcare Conference in San Francisco in January, Ron Rittenmeyer, executive chairman and CEO of Tenet, said 2,000 jobs, or about 2 percent of Tenet's workforce, would be eliminated under the cost-cutting plan.
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