Why health systems are cutting hundreds of administrative jobs

Modern Healthcare – Thursday, February 27, 2025
By Caroline Hudson

A wave of health systems are laying off hundreds of non-clinical employees as they strive for more efficient operations — and a way to shore up lagging financial performance.

More than a dozen systems, including Mass General Brigham and Cleveland Clinic, announced layoffs in management, administrative and other roles over the past two months. The layoffs signal another industrywide push to achieve sustainable margins in a post-pandemic environment, while also avoiding negative effects on patient care.

Systems continue to battle rising costs, staffing shortages and low reimbursement rates in a rapidly changing operating landscape. Growing uncertainty about federal funding for healthcare in the last few weeks has created yet another issue for systems to watch.

Here’s a look at some of the latest job cuts at health systems and what’s driving them.

Which systems are cutting jobs?

Many health systems have announced non-clinical layoffs.

Boston-based Mass General Brigham said earlier this month it plans to cut administrative and management jobs as part of a larger restructuring that will be completed in March. The cuts, estimated to be in the hundreds, are the largest in the system’s history.

Grand Rapids, Michigan-based Corewell Health last week confirmed cuts in non-patient-facing roles. The system did not say how many jobs were affected, though some reports estimate more than 150 jobs.

Baystate Health, which is based in Springfield, Massachusetts, cut nearly 100 corporate positions this month.

Cleveland Clinic said in January it is laying off 114 employees in manager positions.

Other systems cutting jobs include Jefferson Health, the Queen’s Health Systems and Main Line Health.

What jobs are being targeted?

Recent layoffs have mostly affected non-patient-facing roles, such as accounting, revenue cycle management, human resources and other back-office functions. Some health systems are also cutting leadership roles to reduce their layers of management.

Non-clinical positions have been a target at health systems for years, largely due to technological advancements such as automation and artificial intelligence that are a cheaper option for completing back-office tasks.

Many systems navigating financial challenges look to cut non-clinical roles first as a way to quickly cut costs, boost efficiency and avoid changes to patient-facing staff.

Why are health systems laying off administrative staff?

Systems are pointing to financial challenges as the main driver behind layoffs.

Mass General Brigham, for example, said it had to make changes to avoid a projected $250 million budget shortfall over the next two years. The health system has grappled with shaky financial performance for several years.

Job cuts at Cleveland Clinic followed a lower-than-expected margin in 2024, while Main Line cited Medicare and Medicaid reimbursement rates that are not keeping up with rising costs.

Health systems are looking for every tool they can use to return to sustainable operating margins, Mark Pascaris, senior director at credit rating agency Fitch Ratings, said. Patient-facing roles aren’t a good option for cuts because of existing staff shortages and the possible need for high-cost contract workers if systems fail to fill in gaps, he said.

“Every percentage point really matters,” Pascaris said.

Will the cuts continue?

Yes. Industry observers say the trend of health systems cutting non-patient-facing roles isn’t over.

Health systems are facing more financial uncertainty due to proposed cuts in Medicare and Medicaid, in addition to the ongoing battle against inflation and elevated expenses.

Despite the quick financial benefit, analyst say there is a point when cutting jobs does more harm than good at a system.

“I do think there’s a delicate balance of managing how deep you can cut in any function,” Rick Kes, healthcare senior analyst at consulting firm RSM, said.

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