Hospital and health system executives are navigating a complex financial landscape, with operating costs under constant pressure. As part of their cost-reduction strategies, several hospitals have turned to outsourcing or eliminating IT roles.
Despite initial waves of layoffs in recent years, reporting by Becker's suggests that while cuts continue, their pace may be slowing, potentially signaling a shift in strategy.
Since July 18, health systems have announced plans to reduce IT positions, with a mix of permanent layoffs and outsourcing initiatives.
Ongoing layoffs across the industry
Among the latest developments, Winston-Salem, N.C.-based Novant Health announced the permanent layoff of 81 IT employees, effective Aug. 25. Novant is restructuring its IT system as part of broader operational changes, joining other health systems in reducing internal IT roles.
Kaiser Permanente, one of the nation's largest nonprofit healthcare organizations, has made several rounds of layoffs in 2024. In July, the Oakland, Calif.-based health system eliminated over 70 IT roles, marking its second round of IT cuts this year. This followed a previous announcement that Kaiser Foundation Hospitals was laying off 76 employees, many of whom were in IT and marketing.
RWJBarnabas Health, based in West Orange, N.J., laid off 79 employees, most of whom were in time-limited IT training roles. This reflects a broader trend of healthcare organizations reevaluating short-term IT roles as part of ongoing workforce optimization.
Additionally, Mass General Brigham, based in Somerville, Mass., has opted for a voluntary separation program, offering buyouts to employees in its technology division. The system expects to disclose the impact of this program in November, which may further affect its IT workforce.
Outsourcing as a cost-saving strategy
Beyond direct layoffs, outsourcing has become a preferred strategy for reducing IT-related expenses while maintaining critical functions. Providence, R.I.-based Care New England has partnered with IT service provider Kyndryl, transferring some of its IT staff to an external vendor. This move aims to cut operating costs while offering career growth opportunities for IT employees, according to the health system.
Similarly, West Reading, Pa.-based Tower Health and Mishawaka, Ind.-based Franciscan Alliance have outsourced their IT departments, shifting dozens of IT roles to external companies. For these health systems, outsourcing provides a dual benefit: reducing financial burden while retaining service continuity through external partnerships.
A slowing trend or ongoing realignment?
While these layoffs and outsourcing moves continue, the pace of IT job reductions appears to be moderating. Health systems such as Bon Secours Mercy Health of Cincinnati have reported minimal eliminations, with the majority of affected positions being unfilled roles rather than occupied ones. This may suggest that while cost pressures remain, some systems are seeking alternative ways to optimize their workforce without substantial job losses.
Furthermore, as health systems increasingly integrate digital transformation and AI tools, IT roles may evolve rather than disappear altogether. The buyouts at Somerville, Mass.-based Mass General Brigham, for example, reflect a more measured approach to workforce reductions, allowing health systems to trim excess roles while making room for potential rehires in the future.