Advocate Aurora Health is offering early retirement buyouts to about 300 employees as it works to deliver on the goals of its 2018 merger.
The combination of Advocate Health Care and Aurora Health Care created the country's 10th-largest nonprofit hospital network, but costs are up—including expenses related to salaries, wages and benefits. The hospital chain aims to become more efficient, partly by reducing headcount.
The Downers Grove- and Milwaukee-based organization has offered voluntary severance packages to select employees at the manager level and above who are older than 60 with more than 10 years of service.
"Aligned with our commitment to transform care and accelerate affordability, we offered a voluntary early retirement program to management who meet certain eligibility requirements based on age and years of service," a representative for the hospital chain said in an email. "Approximately 300 individuals are evaluating whether or not to opt into the program."
Consolidation often leads organizations to eliminate redundant operations and employees through buyouts and layoffs. However, Advocate Aurora Health won't say whether it plans to retain both its CEOs.
Total revenue at the 27-hospital network rose 3 percent to $3 billion in the first quarter, but operating income fell slightly to $112,779,000 as costs increased. Expenses related to salaries, wages and benefits rose 4 percent to $1.7 billion in the quarter.
Jim Skogsbergh, the former head of Downers Grove-based Advocate, took home $11.7 million in 2017—up 42 percent from the year prior. Dr. Nick Turkal, the former head of Aurora, got a 187 percent raise to $11.4 million in 2017.
In addition to the voluntary severance packages, Advocate Aurora Health also cut costs this year by eliminating bonuses for rank and file workers. Employees were notified in February they would not receive the annual award.
"As part of our integration work, and after careful consideration, we hit pause on the award to reevaluate how it may fit into our unified plan moving forward," Kevin Brady, the health system's chief human resources officer, said in a May email.
The organization currently has about 70,000 employees, including more than 8,000 doctors.
"Advocate Aurora Health offers early retirement buyouts" originally appeared in Crain's Chicago Business.