University of Pennsylvania Health System is cutting 300 jobs
A health system executive said the cuts are part of an effort to contain costs at time of narrow profits in health care, not a reaction to the potential for federal funding cuts.
The University of Pennsylvania Health System told staff Tuesday that it is trimming 300 positions, or about half a percent of the nonprofit’s 49,000 employees. More than 100 of those jobs are vacant or held by people who have announced their retirements.
The health system cuts are part of an effort to be as efficient as possible and to be able to reinvest amid lower levels of profitability in health care following the industrywide increase in the cost of labor and supplies during the COVID-19 pandemic.
In the three years before the pandemic, Penn’s operating profit margin averaged 5.7%. In the last three fiscal years, the average has been 2.2%, according to an Inquirer analysis of Penn’s annual financial statements.
“This is a very, very difficult environment right now,” Michelle Volpe, the health system’s chief operating officer, said in an interview after the announcement.
The job cuts are not a reaction to a reduction in federal funding at the University of Pennsylvania, which owns the health system, by the administration of President Donald Trump, Volpe said.
The positions are spread across the six-hospital system and will not affect patient care, Penn said. The eliminated jobs include office managers, technical managers, and a small number of senior leaders at Penn’s hospitals.
The question faced by managers involved in the plan announced Tuesday was: “How can we do what we’re doing today in a more cost-effective, and as important, streamlined and an efficient way?” Volpe said.
To get at that, management “looked at the differences in how our hospitals provided the same service” to identify the best way of doing things and used that as a model across the entire system, Volpe said.
Penn expects the cuts to save in the neighborhood of $40 million to $45 million annually. The system’s operating profit was $248 million in fiscal 2024.
The savings, Volpe said, will help pay for the recruitment of physicians and other employees to expand patient services and to invest in information systems. ”You clearly need to save money, right, to be able to reinvest,” she said.
The cuts at Penn follow the layoffs in January of nearly 200 nonclinical staff, or 1.5% of the workforce, at Main Line Health. Also in January, Jefferson Health laid off 171 back-office employees.