Dive Brief:
Trinity Health is laying off 10.5% of its revenue cycle management staff as the Livonia, Michigan-based health system manages heightened costs and looming financial headwinds in the healthcare sector.
The health system will outsource the affected revenue cycle work to a vendor to ensure the provider’s long-term sustainability and future growth, a Trinity spokesperson told Healthcare Dive.
The health system said it’s contending with low reimbursement from payers, increased costs for supplies and drugs, staffing shortages and federal funding cuts that threaten its bottom line, according to Trinity. “We have a responsibility to remain operationally and financially sustainable,” the health system said in a statement Friday. “That requires us to consider new ways to reduce costs while sustaining the safe, accessible and affordable high-quality care our communities depend on.”
Dive Insight:
Trinity, which operates 92 hospitals and employs 133,000 workers across 25 states, is facing financial headwinds as the number of uninsured Americans is set to rise.
Last summer, President Donald Trump signed massive tax and policy legislation into law that included more than $1 trillion in cuts to federal healthcare spending, especially in the safety-net insurance program Medicaid.
Additionally, more generous financial assistance for people buying coverage on the Affordable Care Act exchanges expired at the end of the year, likely pushing some enrollees to drop their plans as their costs increase.
Those policies could have significant financial impacts for providers, who would likely see less revenue as well as an increase in uncompensated care expenses as a result. Trinity projects “recent and future government funding policy changes” could lower its annual revenue by $1.5 billion.
The provider also reported losses last year. Trinity posted a $12.2 million operating loss on $25.4 billion in operating revenue in its financial year ended June 30.
Other health systems have laid off workers as the sector faces looming financial challenges and increased expenses. In November, large nonprofit Providence said it would cut staff at facilities in Washington and Oregon. And earlier last fall, Memorial Sloan Kettering Cancer Center reported it would lay off staff as costs for drugs, supplies and labor outpaced revenue growth.
