Dive Brief:
- Mass General Brigham has offered voluntary separation agreements to an unspecified number of employees in its digital unit, the Boston-based nonprofit operator confirmed in a Monday statement to Healthcare Dive.
- If MGB does not hit its targets for employee separation, the company may conduct layoffs beginning next month, according to a Boston Herald report.
- The announcement comes after state regulators pressured MGB to rein in healthcare spending. Last year, MGB was required to file a performance improvement plan with the Massachusetts Health Policy Commission after the agency determined its cost growth was out of line with expectations.
Dive Insight:
MGB is the largest private employer in Massachusetts, employing over 80,000 at a network of hospitals, urgent care facilities and specialty practices, according to its website.
The decision to offer buyouts to the technology division, which provides services ranging from information technology to maintaining patients’ electronic health records, stems from MGB’s desire to move toward a “more modern technology infrastructure,” a hospital spokesperson said.
Applications for buyouts opened on the first of this month and will close on Nov. 15, according to a spokesperson. The health system plans to announce the number of impacted employees on Nov. 22.
MGB’s buyout includes two weeks of severance for every year of service, compared with the organization’s standard separation package of one week of severance for every year of service, according to the Boston Herald report. Severance is capped at 52 weeks compared to the standard 24-week time frame.
The announcement comes as MGB has struggled with financial losses. It reported an operating loss of $432 million for the 2022 fiscal year and a loss of $350 million in the first year of the pandemic.
This year, MGB reported negative operating margins in the first half of 2023, due in part to elevated inflation. However, in the third quarter, executives said the provider’s finances were beginning to rebound.
The health system posted third quarter income from operations of $69 million, with a net gain of $437.5 million, and revenue rose 15% year over year to reach $4.9 billion. The operator also reported in July that it was most on track to reach its performance plan cost-reduction targets for the year.
In a press release on the system’s third quarter earnings, the system’s CFO Niyum Gandhi said that, while MGB was moving toward financial recovery, the system needed to “moderate our expense growth” to ensure MGB’s long-term stability.
MGB’s spokesperson declined to provide specifics about any future reductions in force at the health system.
