Lifespan Lays Off 20% Of Executive Team

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Dive Brief:

• Rhode Island-based Lifespan has shed 20% of its executive team in a bid to reduce overhead and streamline operations, according to a statement from health system president and CEO John Fernandez. 
• The layoffs are projected to save the five-hospital nonprofit system $6 billion during its 2025 fiscal year. The health system did not immediately provide a list of all impacted positions or specify the effective date of the cuts.
• It’s the latest in a series of organizational changes for the health system, which is finalizing deals to rebrand as Brown University Health and expand into neighboring Massachusetts by purchasing hospitals from bankrupt Steward Health Care.

Dive Insight:

Fernandez called the cuts a “strategic restructuring,” and added that reducing Lifespan’s workforce from the top would allow the system to reallocate resources to patient care and support operations. 

Lifespan is the latest system to target executive positions to reduce spending. Last year, North Carolina-based Novant Health cut several executive roles during a restructuring. In 2022, Washington-based Providence reduced its regional executive teams to three divisions from seven.

The health system has been working to turn around is financial performance since the pandemic, when the health system posted losses as expenses climbed and revenue growth stalled. Lifespan was back in the black in 2023, reporting a net income of $37.1 million and an operating income of $8.6 million that year.

However, more recent financial results indicate Lifespan may still be struggling to keep expenses in check.

Although Lifespan’s well-performing investment portfolio boosted results for the nine months ended June 30, the health system’s patient services revenues and expenses grew at approximately the same rate, just below 11% year over year, excluding one-time payments. 

Meanwhile, compensation and benefits rose 7.7% year over year.

As Lifespan implements its leaner executive team, the system is also looking to expand into Massachusetts and change its operating name.

Lifespan will soon operate under the name Brown University Health. As part of a deal, Brown University will give Lifespan $150 million over seven years to strengthen Lifespan’s financial capacity, according to a news release.

And earlier this month, Lifespan received court approval to buy two Massachusetts hospitals from bankrupt Steward Health Care for $175 million: Fall River-based St. Anne’s Hospital and Taunton-based Morton Hospital.

Massachusetts hospitals have not been profitable for Steward in recent years, according to documents filed in federal bankruptcy court. In total, Steward reported $90 million in earnings before interest, taxes, depreciation and amortization losses related to the facilities between January to June 2024.