Carolinas HealthCare slashes 100 jobs in cost-cutting move

Although the operating margin at Carolinas HealthCare System improved in the first six months of fiscal 2014, the Charlotte, N.C.-based health system said it has immediately cut 100 executive and managerial jobs as part of a massive cost-reduction plan.

Carolinas, which owns and manages more than two dozen hospitals, said most of the 100 cut positions are vacant. The move is part of the system's broader strategy to reduce expenses by $110 million a year, which Carolinas said was necessary as Medicare reimbursement drops and as broader healthcare regulations change. The system also predominantly treats patients in North Carolina, a state that refused to expand Medicaid eligibility under the healthcare reform law.

“We believe that patients and communities are best served by those providers who can excel at sustaining quality, safety and excellent customer service, while at the same time reducing costs,” Carolinas said in a statement. “As we move through this process, the needs of our patients will remain our top priority.”

Hospitals and health systems, particularly those in the not-for-profit sector, have increasingly turned to workforce reductions as a means to stem the tide of rising operating costs. Indiana University Health in Indianapolis laid off more than 900 employees and offered early retirement to others this past fall, a move that has significantly boosted the system's bottom line.

The Cleveland Clinic, Wake Forest Baptist Medical Center in Winston-Salem, N.C., KentuckyOne Health in Louisville and several other large providers have also laid off staff, eliminated vacant positions or offered early retirement deals to improve the operations side of their balance sheets.

Carolinas posted a 2.4% operating margin in the six months ended June 30 (PDF), compared with a 2% margin in the same six-month period of 2013. The system's half-year operating surplus increased more than 23% to $56.2 million, while revenue rose 3.8% to $2.36 billion. Carolinas' total surplus, which factors in investment income, quadrupled to $182.1 million in the first half of 2014. Bad interest rate swaps negatively affected Carolinas in 2013.

Like other systems that have recently released quarterly results, Carolinas struggled with lower inpatient volume. Inpatient discharges dropped 2.4% in the first six months, but the system's medical group recorded a 3.5% increase in patient visits to doctors' offices.

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