Health systems face declining margins, cut leadership amid rising costs

Editor's Note

Four consecutive months of reduced health system margins have resulted in significant layoffs and restructuring in top leadership, Becker’s Hospital Review reported September 30.

According to the article, which cites Strata Decision Technology's August Healthcare Industry Financial Benchmarks report, average health system margins fell to 1.9% in August, down from 2.1% in July. Rising costs include supplies, staffing, digital transformation, and cybersecurity.

Several health systems have already initiated leadership reductions in response, Becker’s reports, citing the examples of University Hospitals in Cleveland, Baystate Health in Massachusetts, and Lifespan in Rhode Island.

Industry leaders told Becker’s that more changes may be on the horizon. For example, D. Richelle Heldwin, Chief Risk and Compliance Officer at St. Johns Health in Wyoming, emphasized the need for leadership teams to quickly adapt to the evolving healthcare landscape. Heldwin noted that healthcare organizations are focusing on leaders who can leverage data-driven decision-making and wear multiple hats to manage broader scopes of services. The shift toward leaner leadership structures also aims to channel more resources to bedside care.