Dive Brief:
- Kaiser Permanente and Novant Health have announced cuts to their IT departments, becoming the latest nonprofit health systems to slim their technology teams this year.
- Kaiser Permanente announced it would cut 115 IT roles nationwide last month, with the majority of cuts impacting the Northern California region, the Oakland-based operator confirmed on Tuesday.
- Winston-Salem, North Carolina-based Novant Health announced last week it will cut an undisclosed number of roles on its Digital Products and Services team, which provides services including IT support. Over the next several months, the operator will transfer some DPS services to an external partner, according to a statement shared with Healthcare Dive.
Dive Insight:
Hospital operators have increasingly downsized their IT departments as they navigate razor thin operating margins fueled by inflation and prolonged staffing shortages.
The cuts at Kaiser and Novant follow IT reductions at fellow nonprofit operators including Boston-based Mass General Brigham and Danville, Pennsylvania-based Geisinger.
Earlier this month, MGB cut 20 roles in its technology division after previously offering voluntary buyouts for technology workers, while Geisinger shed 47 IT roles this summer, according to reporting from PennLive.
Kaiser Permanente will cut IT workers in Northern California, Oakland, South San Francisco, Walnut Creek and Pleasanton. The spokesperson said “no union represented employees were affected by this change.”
Earlier this fall, a 75,000-strong coalition of workers engaged in historic labor contract negotiations, including a three-day strike. The parties reached a deal in October, which included outsourcing protections for workers.
Novant will transition its “infrastructure and end-user services” to Indian firm Wipro in the second quarter of 2024, a spokesperson said.
Some of the impacted employees at Novant will have the opportunity to apply for other roles within the company, a spokesperson added.
This is Novant’s most recent round of layoffs. The health system most recently cut 160 positions in October, citing a “challenging healthcare environment.”
Health systems may continue cutting or outsourcing their IT services next year.
Credit ratings agency Fitch Ratings released a report in October predicting operating conditions will remain tight headed into the new year, and health systems may have to “use other levers to control expenses,” including consolidating service lines.
Last month, consultancy Guidehouse surveyed 144 health system chief executives and chief financial officers about their IT investment priorities for 2024. A third of respondents said they have expanded relationships with IT outsourcing partners since 2019 to improve efficiencies in non-core functions, such as billing or IT support.
