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Dive Brief:
- Trinity Health is laying off 10.5% of its revenue cycle management staff as the Livonia, Michigan-based health system navigates higher costs and financial challenges in the healthcare sector.
- The health system will outsource the affected revenue cycle work to a vendor to support its long-term sustainability and future growth, according to a Trinity spokesperson.
- Trinity Health attributes these challenges to low reimbursement rates from payers, increased costs for supplies and pharmaceuticals, staffing shortages, and reductions in federal funding.
Dive Insight:
Trinity Health, which operates 92 hospitals and employs approximately 133,000 staff across 25 states, is confronting significant financial pressures compounded by a potential increase in the number of uninsured Americans.
Federal healthcare spending cuts enacted in 2017, initially through the Tax Cuts and Jobs Act, have impacted healthcare providers.the Congressional Budget Office estimated that the 2017 tax legislation would result in ample cuts to healthcare programs over a decade. Read more here.
the expiration of enhanced Affordable Care Act (ACA) subsidies at the end of 2022 also contributed to potential coverage losses. A Kaiser Family Foundation report projected that millions could loose coverage as costs rise. This shift impacts providers, possibly leading to lower revenue and increased uncompensated care.
Trinity Health anticipates that federal funding policy changes will reduce annual revenue by $1.5 billion. the health system reported an operating loss of $12.2 million on $25.4 billion in operating revenue for the fiscal year ending June 30, 2023.
Other health systems similarly face financial pressures.In November 2023, Providence announced staff reductions at facilities in Washington and Oregon. Read more about Providence’s cuts here. Memorial Sloan Kettering Cancer Center also made staff cuts in late 2023, citing rising costs for drugs, supplies, and labor. Further details on MSK’s actions are available here.
Key Takeaways:
- Rising costs and declining federal funding are creating financial pressures for health systems like Trinity Health.
- Revenue cycle management is a key area where health systems are seeking to reduce costs through outsourcing.
- Changes to ACA subsidies and broader insurance coverage trends impact provider revenue and uncompensated care expenses.
- Layoffs and restructuring are becoming increasingly common strategies for health systems facing financial headwinds.
