San Diego-based Scripps Health's cost-cutting plan will include layoffs in 2018, according to The San Diego Tribune.
In a recent memo to employees and affiliated physicians, Scripps President and CEO Chris Van Gorder said the cuts are necessary to remain competitive, as payers increasingly focus on low prices in contract negotiations and patients with high-deductible health plans shop around for care.
In a statement to Becker's Hospital Review, Mr. Van Gorder indicated layoffs would happen at an administrative and leadership level. The number of employees or roles to be affected was not specified. "We are still hiring patient caregivers," he said.
Mr. Van Gorder noted that major changes in healthcare delivery are forcing health systems to adjust.
"Healthcare is changing rapidly with huge growth in ambulatory care and reduced utilization of inpatient hospitals — and given the elimination of the individual mandate under the Affordable Care Act, the uninsured will once again be growing nationally," he said. "It's important that healthcare organizations proactively change to address these changes, and Scripps is doing so with a major restructuring of our organization to (1) reduce costs for our patients; (2) increase the quality of our services even though they are already strong, and; (3) improve our patient experience in both our hospitals and our many ambulatory sites of care."
With the aim of lowering costs by $30 million, Scripps is making several changes, including restructuring its leadership model and implementing corporate services reductions. The reorganization comes after Scripps missed its annual budget by $20 million last year for the first time in 15 years, according to The San Diego Tribune.
"We've got to shift our organizational structures around to be able to deal with the new world of healthcare delivery, find ways of lowering our costs significantly," Mr. Van Gorder told The San Diego Tribune this week. "If we don't, we will not be able to compete."
Although Scripps missed its budget last year, the system remains financially strong. Fueled by strong investment gains, Scripps' net income increased 25 percent year over year to $350 million in 2017, according to The San Diego Tribune.
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