Adventist Health is launching a reorganization that will consolidate its care networks and reduce its administrative head count by dozens, according to a statement from the organization and a California regulatory filing.
The Seventh-day Adventist Church-affiliated nonprofit said the moves will save more than $100 million in administrative costs, which will be reinvested into its hospitals and clinics “to help realign directly where care is delivered.”
Adventist’s announcement also highlighted a recent affiliation agreement with Mid-Columbia Medical Center, which, if approved by regulators, would grow Adventist’s Oregon State Network.
“Our commitment to rural and urban healthcare remains steadfast, and we are expanding to other locations to invest and transform the integrated delivery of care,” President and CEO Kerry Heinrich said in the announcement.
Adventist notified the California Employment Development Department that it would be laying off 59 employees who were in-person and remotely at its Roseville, California, headquarters, according to a Worker Adjustment and Retraining Notification (WARN) Act notice filed Wednesday. The layoffs already began Feb. 1 and will continue to April.
“We recognize that these changes impact people’s lives and want to respect each affected individual,” Chief People Officer Joyce Newmyer said in the system’s announcement. “We will make every effort to identify other opportunities for team members impacted.”
Adventist said it provided all affected employees with 60 days written notice prior to their release. The system had previously laid off 52 employees last July, according to the regulator’s records.
Accompanying the layoffs is a shift from seven care networks to five, Adventist said. The final configuration will have one network serving each of the following regions: Northern California, Central California, Southern California, Oregon and Hawaii. No office closures are planned, a representative told Fierce Healthcare.
“Reducing the number of care networks strengthens our operational structure and broadens the meaning and purpose of our network model as well as the geographical span of ONE Adventist Health,” Chief Operating Officer Todd Hofheins said in the announcement. “This also reduces overhead and administrative costs.”
Adventist Health consists of 23 hospitals and nearly 300 clinics. It saw $5.2 billion in total revenue, a $149 million operating loss and $8 million in net income during the 2021 fiscal year.
The nonprofit has faced a $254 million operating loss and a $637 million net deficit over the first nine months of 2022, as of its most recently available financial statement. Included in those nine-month operating expenses was $28 million related to organizational restructuring.
Word of Adventist’s reorganization and administrative layoffs comes as hospitals across the country closed out a year of skyrocketing expenses and revenue hiccups.
It also lands about a month after a similar move from Philadelphia-based Jefferson Health. The nonprofit academic system said in mid-January that it would be corralling its 18 hospitals into three regional divisions, a flatter structure that “will involve an unspecified number of job cuts, mostly among executives,” per reports.
A similar effort was launched last summer by Renton, Washington-based Providence, which shifted to a “leaner” operating model for its 52 hospitals and other business lines after facing operating deficits of $714 million and $306 million in 2021 and 2020.