Detroit Medical Center today announced layoffs, elimination of open positions and an overall 1% reduction in its workforce to reduce costs and improve efficiencies, officials told Crain's Detroit Business.
The exact number of layoffs or labor reductions won't be known until after employees are informed and they decide on new positions offered to them, officials said.
But if the staff reduction holds at 1%, about 125 employees will lose their jobs from DMC's current 12,500-person workforce. An unspecified number of open positions also were cut.
It was also unclear the percentage of expense reduction and how that might affect DMC's profitability. DMC officials said the hospital system is in good financial shape.
Over the past several years, DMC has undergone employee reductions for a variety of reasons. Last fall, DMC closed its surgery hospital in Madison Heights after it flooded during a 5-inch rainstorm. About 127 were laid off, although some were rehired in different positions within DMC. Another 63 were laid off in September after DMC outsourced its linen services to an out-of-state vendor.
DMC is owned by Tenet Healthcare Corp., a for-profit chain with 87 hospitals based in Dallas. In 2011, Vanguard Health Systems acquired the cash-strapped DMC system. Less than two years later in 2013, Tenet acquired Vanguard.
"The DMC continually works to achieve efficiencies across our system," Conrad Mallet Jr., DMC's chief administrative officer, said in a statement.
"Most recently, this process resulted in operational improvements and the discovery of opportunities to realign some administrative and related functions. By first eliminating various open positions and realigning job functions, we improved efficiencies and minimized the need for workforce reductions," Mallet said.
Mallet said DMC focused on "operational enhancement with careful attention to limit any effect on direct patient care."
DMC is offering affected employees the option to apply for positions in other areas, transfer to other Tenet hospitals or facilities outside of Michigan and connect with other potential employers.
Mallet said the staffing reductions are not a result of our system's financial performance, but are a result of positioning DMC well for "many years to come."
Tenet, which posted earnings of $19 million on total revenue of $18 billion in 2014, does not provide DMC's financial and operational numbers. A Crain's review in 2014 showed that DMC's profitability had improved under Vanguard and Tenet.
It is believed DMC is doing financially better than Tenet overall, primarily because of Michigan Medicaid expansion and a reduction in bad debt and charity care, sources have told Crain's in recent months.
DMC isn't the only player in the local health care industry that's slimming down.
Late last month, layoffs began at Blue Cross Blue Shield of Michigan when about 25 employees and three contractors were cut from the state's largest insurer's health care value division as part of a three-year plan to cut $300 million from expenses, or about 10%.
Last week, at least seven employees from the Blues' group health division also were laid off with about a dozen job positions eliminated, sources said. More layoffs are expected over the next several weeks as the Blues seek to reduce administrative expenses and prepare for the future.