Kaiser Lays Off IT Workers For A Second Time In 4 Months

Dive Brief:

• Kaiser Permanente confirmed Tuesday via email it had cut 72 information technology positions as part of an ongoing effort to reduce costs across the organization.
• Affected positions were in California, with 49 in Pleasanton, 19 in Pasadena, two in Stockton and one in Oakland and Bakersfield each, according to Worker Adjustment and Retraining Notification notices Kaiser filed with the California Employment Development Department on Feb. 26.
• The cuts come about four months after Kaiser cut 115 IT roles nationwide in November.

Dive Insight:

Just weeks ago, Kaiser said it drew in $4.1 billion in net income for 2023 — a near mirror image of its $4.5 billion net loss in 2022. Kaiser attributed its income in part to effectively managing administrative costs and reducing “inefficiencies.”

Over the past six months, as health systems continue to fight inflation and prolonged staffing shortages, many have opted to downsize their IT departments to increase operating margins.

Boston-based Mass General Brigham and Winston Salem, North Carolina-based Novant Health are among the nonprofit health systems that have cut IT roles, citing a need for increased efficiency. 

Still other systems have elected to outsource their IT departments. In September, Care New England transitioned many of its IT and applications employees to managed service provider Kyndryl, for example.

Consultancies predict that more health systems may follow suit in trimming or outsourcing IT teams.

Credit ratings agency Fitch Ratings released a report in October predicting operating conditions would remain tight this year. Health systems may have to “use other levers to control expenses,” including consolidating service lines.

Guidehouse surveyed 144 health system chief executives and chief financial officers in November about their IT investment priorities for 2024. A third of respondents said they have new or expanded relationships with IT outsourcing partners since 2019 to improve efficiencies in non-core functions, such as billing or IT support.

Kaiser plans to either offer impacted employees the opportunity to apply for other roles within the company or provide “severance packages, career support and outplacement services,” according to a spokesperson.