Nonprofit giant Mass General Brigham will be laying off numerous nonclinical employees to close major budget shortfalls.
The organization declined to share how many employees may be affected. A representative instead pointed to a $250 million two-year budget gap the system is working to close, but noted that the total is “not a direct correlation to the number of roles.”
A report from The Boston Globe, which cites an internal email to employees and other statements from executives, characterizes the cuts as “hundreds of employees” being let go this week and in a second wave planned for March.
The integrated health system is Massachusetts’ largest private employer with more than 80,000 workers and $20.6 billion in total operating revenue for the fiscal year ended Sept. 30.
During that same period, MGB reported a $45.7 million operating gain (0.2% operating margin), which it noted drops to a $72 million operating loss (-0.4% operating margin) when excluding revenues pertaining to the prior year’s activities. It logged nearly $10.3 billion in spending on its employees’ compensation and benefits—just over half of its $20.5 billion in total operating expenses.
Of note, those numbers exclude nonoperating items such as almost $2 billion in investment income.
MGB said in its statement that it is “consolidating certain management and administrative positions throughout the system. These actions are primarily focused on non-clinical and non-patient facing roles in an effort to enhance efficiency, reduce costs and maximize support for frontline clinicians.”
The system said it would be giving affected employees “market competitive severance packages and benefits coverage.”
The statement attributes the budget shortfall to “the same unrelenting pressures affecting many health care systems across the country.”
Though MGH has reported higher year-over-year revenues and volumes, the system in December’s financial results also called attention to overcrowded emergency departments and a glut of primary and secondary care patients amid “an unrelenting capacity crisis” affecting Massachusetts. A non-acute bed shortage has led to longer-than-necessary stays that “continue to curtail revenue growth,” it said.
Inflationary increases to labor and supply costs have slowed, yet “several years of elevated cost increases relative to modest annual increases in reimbursement rates in a capacity-constrained environment has resulted in persistent financial impact,” MGB said in December.
Alongside those earnings and in Monday’s layoffs statement, MGB said it is addressing the issues with a combination of “responsible resource stewardship,” operational integration and initiatives to diversify revenue streams.
The push to contain costs comes as MGB restructures the clinical and academic teams of its flagship Massachusetts General Hospital and Brigham and Women’s Hospital as singular departments, which the organization said would support integrated care delivery. That effort was announced in March 2024 and is planned to span multiple years.
The news also follows weekend news that the National Institutes of Health (NIH) would be subjecting grant funding recipients to a 15% indirect cost rate—slashing payments for the indirect costs of clinical research. Such research is a major portion of MGB and its flagship institutes’ operations, with the organization reporting $1.27 billion in research revenue from the NIH and other federal agencies in fiscal year 2024.
Executives told the Globe that the NIH cuts did not factor into Monday’s decision, but said that addressing its operating budget deficit would help MGB weather such unexpected disruptions.