IU Health has announced they will be laying off approximately 800 employees by December in an effort to improve productivity and cut down on expenses. In a letter that was reportedly sent to IU Health team members from CEO Dan Evans, IU Health has significantly reduced labor costs with flexible scheduling and by not filling open positions, but those reductions have not been enough.
The letter explains that IU Health adopted a goal of improving productivity by 25 percent over the next five years because the company believes that “the future reimbursement environment, from all payers, will look much like Medicare does today,” and in order to manage “population health” well, the hospital system must invest in new technologies and advances in the face of worsening reimbursements.
In the letter, Evans reportedly stated that the cost-cutting efforts have not been sufficient, and they must take more aggressive measures to cut cost, including reductions in workforce. As a result, the academic health center, IU Health Ball Memorial Hospital, IU Health North, Saxony and Tipton hospitals, as well as System Services, will be affected by reductions in workforce.
However, the letter states that, “consistent with our values of mutual trust and respect, we will make every effort to support all IU Health team members through this difficult transition.” Employees who will lose their jobs will be notified in early October and will be provided with severance and outplacement assistance.
In addition, IU Health is offering for the first time an early retirement option to qualifying team members who are at least 62 years old and will not turn 65 before Dec. 31 that are employed in certain positions at any of the locations undergoing workforce reductions.
While no official total of reductions has been announced, IU Health estimates approximately 800
people will be impacted but they expect many to take advantage of the early retirement program, retraining opportunities and transfers, therefore reducing the number of reductions necessary.
