Health systems slash jobs amid mounting financial pressures

Editor's Note

A recent report in Becker’s Hospital Review outlines six recent examples of hospitals and health systems laying off workers in response to deepening financial strain. In a separate report, the outlet listed 11 hospitals and health systems that received credit rating downgrades from Fitch Ratings or Moody’s Investors Service in 2025.

Citing reimbursement shortfalls, inflation, and rising operational costs, the organizations covered in the June 26 layoff report include:

1. Arkansas Valley Regional Medical Center in La Junta, Colorado, plans to lay off 5% of its employees. The hospital attributed the decision to inflationary pressures, declining reimbursement rates, and rising operational costs.
2. UCSF Health in San Francisco is laying off around 200 positions due to “serious financial challenges,” reportedly focusing on roles with “least impact on patients and daily operations.”
3. Prospect Medical Holdings, based in Los Angeles, will lay off 125 employees at its Prospect Medical Group location in Orange, California. Prospect reportedly has been working since November to sell 10 of its 16 hospitals amid ongoing financial struggles.
4. UC San Diego Health has laid off approximately 230 patient care, managerial, and administrative employees — less than 2% of its 14,000-person workforce — due to “mounting financial pressures.” The organization reportedly cited federal changes affecting healthcare, regulatory instability, and escalating care delivery costs.
5. Vanderbilt University Medical Center in Nashville, Tennessee, plans to lay off up to 650 employees as part of efforts to reduce operating costs in anticipation of reductions in Medicaid reimbursement and government-sponsored medical research.
6. Penn Highlands Healthcare in DuBois, Pennsylvania, laid off 36 positions across two hospitals: Penn Highlands Connellsville and Penn Highlands Mon Valley.

The full report offers additional details and links to full stories of the outlet’s coverage of each example.

Published June 25, the Becker’s report on downgrades lists the following organizations: 

1. Children’s Hospital Los Angeles was downgraded after 3 consecutive years of weak financial performance and ongoing challenges in rebuilding liquidity.
2. Frederick Health’s  operating performance has reportedly recovered more slowly than expected since fiscal year 2022.
3. Holy Redeemer Health System continues to face operating deficits in fiscal 2025, despite early signs of progress from improvement initiatives.
4. Memorial Health System’s downgrade reflects its weak net leverage profile.
5. Methodist Le Bonheur Healthcare’s supplemental funding projections have significantly decreased, worsening existing operating and accounts receivable challenges.
6. Norman Regional Health System reportedly lacks financial flexibility, with low liquidity entirely dependent on a fully drawn bank line.
7. Northern Regional Hospital has experienced rapid cash deterioration and ongoing difficulties in stemming operating cash flow losses.
8. Palomar Health’s downgrade reflects continued erosion in its liquidity.
9. University Hospitals has experienced sustained weak financial performance and only modest liquidity.
10. UofL Health was downgraded following weaker-than-expected financial results in fiscal 2024 and a slow projected recovery.
11. Westchester County Health Care Corp. and Charity Health System also are experiencing weak liquidity and are reportedly increasingly reliant on short-term bank financing.