Allina Health System is eliminating about 350 jobs as it faces unprecedented financial pressure from the industry, the Minneapolis-based operator of hospitals and clinics said Monday.
The job cuts started on Monday. Most of the eliminated employees are not medical care providers, Allina wrote in a statement. The health system said workers will be offered severance pay, health benefits and relocation resources.
Allina is one of the largest health care providers in the Twin Cities with more than 28,500 full-time and part-time employees at the end of last year.
“Allina Health, like many health systems across the country, is facing unprecedented financial challenges,”[ads1]; the health system wrote Monday in a statement. “Our focus remains on ensuring we remain a sustainable community for years to come.”
Healthcare consulting firm Kaufman Hall reported last month that hospital operating margins returned to positive territory in May but remain well below historical norms.
The monthly flash survey of nationwide data reported that “discharges, emergency department visits and operating room minutes increased, although very modestly on a year-over-year basis.”
“Income from outpatient treatment is increasing at a much greater rate than income from outpatient treatment,” the survey states. “While labor costs remain significant, spending in May was well below comparable levels from May 2022.”
Earlier this month, Allina announced that financial problems had forced it to put construction of a replacement hospital on hold at Cambridge Medical Center in Isanti County. In a statement, the health system said it hoped to “find a way forward to create and invest in the campus.”
In May, Allina reported an operating loss of $101.6 million in the first quarter. The nonprofit’s chief financial officer said the results reflected industry-wide problems with high labor costs and the inability to discharge patients to step-down facilities, such as nursing homes.
Insurance reimbursements had not kept pace with spending, including inflation, in supply costs, Allina said in May. In addition, hospital emergency departments were increasingly treating patients who did not necessarily need hospital-level care, but who did not have access to alternative centres, the CFO said.
On Monday, a spokeswoman said via email that the health system had been “working for months to return to financial sustainability. Despite cost-cutting measures Allina Health has already implemented and the great efforts of our teams, we have reached a critical point which requires us to take decisive action.”
Allina operates 10 hospitals, including Abbott Northwestern in Minneapolis and United Hospital in St. Paul.