NEW ORLEANS — On May 11, Ochsner Health announced plans to lay off 770 employees — or 2% of its workforce — in Louisiana and Mississippi. The health system, which is the state’s largest private employer, operates 42 hospitals and more than 200 urgent care and health centers in the two states. Before the layoffs, the company said it employed roughly 38,000 people.
The layoffs will affect employees in management, administrative jobs and clerical positions, according to Ochsner CEO Pete November, who said doctors, nurses and other patient-facing staff will not lose their jobs.
“For some time, we have all been working hard to address our financial and workforce challenges,” said the CEO in a company-wide email. “We are not alone in this: healthcare providers across the country have experienced increased labor costs, a shortage of patient care clinicians, high inflation and the end of pandemic relief funding from the government.”
November, who became CEO in 2022, said the health system is not closing or consolidating any of its facilities.
The cuts are expected to save the system between $125 million and $150 million a year. They follow Ochsner’s first unprofitable year in more than a decade. Ochsner reported that its revenues grew to $6.4 billion in 2022 from $5.9 billion in 2021, but it lost $96 million last year and expenses exceeded revenues by 1.5%.
“This is not a decision our executive leadership team takes lightly or one we ever wanted to make,” said November. “It is the hardest change we have ever had to make at Ochsner, but one we must to ensure we continue to be a strong organization.”
November said the the health system isn’t planning any additional layoffs.
Healthcare industry experts say that Medicare and Medicaid reimbursements aren’t keeping up with rising costs for labor, drugs, medical supplies and equipment. There’s also a nationwide shortage of patient care clinicians (physicians, nurses, physician assistants and others). That could mean there are more job cuts to come at other health systems nationwide — although University of New Orleans health care economist Walter Lane doesn’t think this is a harbinger of more bad news to come for the region.
“I think it is just a response to current market conditions,” Lane told Biz New Orleans. “Profits are low or negative and they are looking to cut some costs. I don’t necessarily expect this to be followed by further cuts.”
Here’s November’s complete message to Ochsner employees:
For some time, we have all been working hard to address our financial and workforce challenges. We are not alone in this: healthcare providers across the country have experienced increased labor costs, a shortage of patient care clinicians, high inflation and the end of pandemic relief funding from the government.
I’m grateful to everyone who has contributed to our work to address this challenging environment, which has included reducing discretionary spending, decreasing our reliance on agency workers, renegotiating spending on supply and service contracts and holding on hiring for management positions. We have also led significant efforts to increase clinic visits, improve throughput and develop new innovative care delivery models.
Despite progress and our significant efforts to reduce expenses, we need to do more to ensure we can continue to deliver on our mission and meet the needs of the patients and communities we serve. Today, we are taking the difficult step of reducing the size of our workforce by eliminating 770 positions, which represents roughly 2% of our team. Impacted positions are management and primarily non-direct patient care roles. No physicians are impacted by this reduction, and any impacted employees with active clinical credentials will be offered direct patient care roles.
As an organization whose Core Values are rooted in putting our patients and people first, this is not a decision our executive leadership team takes lightly or one we ever wanted to make. It is the hardest change we have ever had to make at Ochsner, but one we must to ensure we continue to be a strong organization with the resources to fulfill our purpose and lead the way for clinical excellence and innovation.
This organization is full of people who go above and beyond every day to make a difference to the patients we serve, the communities we love and the colleagues we support. For those talented professionals who will be leaving us today: this is not the experience we hoped you would have at Ochsner. I want to thank you for all you have done and for sharing your talents with us.
What to expect today
I take very seriously the gravity of this decision and its impact on our team members and their families. We will do everything we can to deliver the resources and support our team needs and treat everyone leaving our organization with the respect and dignity they deserve. Below is a brief outline of what impacted staff can expect today.
- Team members impacted by this reduction will receive a calendar appointment for a meeting today about next steps and how we are supporting them through this transition.
- Each impacted full and part-time employee will continue to receive full pay and benefits for up to 65 days depending on their work schedule, in addition to severance packages for full-time and part-time employees.
- We will also offer career support, wellness resources and details on how to apply for other job opportunities within Ochsner.
- The HR Solutions Center is standing by to answer questions and provide support to impacted staff throughout the process.
Support and resources for all
We have additional resources for all employees and leaders who need them. As always, our Employee Assistance Program (EAP) is available to all staff facing life challenges, and this resource includes five free sessions with a counselor.
Additionally, the Wellness Hub is an excellent resource on Ochweb that includes a variety of Ochsner-specific programs to support the health and well-being of our teams.
The path forward
I know this news about colleagues we all care about is hard to hear. We are here to listen and support you in the days and weeks ahead, and I encourage you to reach out with whatever questions or help you need.
Today, we are focused on the departing members of the Ochsner team. I encourage each of you to connect with one another and be a source of support and compassion. This is a difficult day, but I am confident in our future and in our continued ability to deliver skilled, trusted and compassionate healthcare throughout the Gulf South region.
I am extremely grateful for your commitment to Ochsner. Together we will continue to make an impact on countless lives.
Sincerely,
Pete November
CEO, Ochsner Health
