Dive Brief:
- West Orange, New Jersey-based RWJBarnabas Health will lay off 79 employees effective March 31 and April 5, according to Worker Adjustment and Retraining Notification notices filed with the state on Jan. 8.
- A spokesperson for the health system said that 74 of the impacted positions were "time-limited information technology training job functions.” The remaining roles were cut due to the closure of an urgent care center.
- The nonprofit health system is the latest to trim its IT staff. Mass General Brigham, Novant Health and Kaiser Permanente reduced their tech and support teams at the end of 2023.
Dive Insight:
Hospital tech layoffs are predicted to increase this year as health systems seek to contain rising labor costs by automating repetitive tasks or outsourcing support functions, according to experts.
Health systems have had to spend more to attract talent since the onset of the COVID-19 pandemic. Staffing shortages and increased competition with employers in other industries, such as retailers, drove up starting wages, said Erik Swanson, senior vice president of data and analytics at Kaufman Hal.
At nonprofit hospitals, the average wage rate has increased from $34.70 in 2019 to $44.24 as of October 2023, according to Kaufman Hall data reviewed by Healthcare Dive.
To control labor spend, health systems are focused on “staffing appropriately,” which could mean reducing headcount in some cases, Swanson said.
IT functions and “back office shared service” roles are likely to be a “heavy focus” in reductions in force, particularly given recent advances in automation technologies, he added.
Hospitals are also eyeing outsourcing in a bid to lower labor costs. A third of health system chief executives and chief financial officers reported that they have expanded IT outsourcing partnerships since 2019 to improve efficiencies in non-core functions, such as billing or IT support, according to a November survey from consultancy Guidehouse.
However, not all hospitals will cut roles to contain costs. Some may cut back on hiring and optimize workflows to do more with less.
For example, some health systems have begun to use a shared service center model for back office functions, Swanson said. Others have used artifical intelligence to optimize their clinician “float pools” to act as internal staffing agencies and move clinicians around facilities as needed.
