Avera Health cutting 'nonclinical' jobs, blames inflation
Avera Health, based in Sioux Falls, said it is cutting jobs among its nonclinical workforce, including those in administration, but not positions such as doctors and nurses. The health system is not alone in reckoning with skyrocketing costs across the board due to inflation.
SIOUX FALLS, S.D. — One of South Dakota's biggest employers is laying off some of its workforce, as inflation fuels rapidly rising costs for equipment and supplies.
Avera Health, based in Sioux Falls, said it is cutting jobs among its nonclinical workforce, including employees in administration, but not positions such as doctors and nurses.
"We are resizing our organization with an even greater focus on delivering high quality patient care while redefining our core business focus around patient care," Avera Health said in an emailed statement. "Sadly, this will mean a reduction in our nonclinical workforce, restructuring in areas and changes in services. When possible, we are working diligently to find new internal roles for team members who are impacted by changes."
It's not clear how many people are affected by Avera Health's workforce reduction. The emailed statement didn't specify, and an Avera representative didn't immediately respond to a follow-up question.
Avera Health employs about 20,000 people across 37 hospitals, 215 clinics and 40 senior living facilities in South Dakota, North Dakota, Minnesota, Iowa and Nebraska.
Avera Health isn't alone in facing skyrocketing costs for supplies and equipment, which is forcing health systems to decide how to cover the difference on their balance sheets.
A recent report from Kaufman Hall and the American Hospital Association found that over 50% of U.S. hospitals expect to see negative operating margins this year, largely fueled by rising costs in every area of the business.
Supplies alone were expected to remain 20-25% more expensive than before the start of the COVID-19 pandemic.
In its statement, Avera Health reported it had been facing an average cost inflation rate of 2-3% before the pandemic. Now the health system is facing 25-40% inflation in pricing for many common medical supplies and other equipment.
"While Avera is caring for more patients than before, high inflation and other additional costs have resulted in rising expenses which we need to address," Avera Health said in its statement. "In light of this, we are challenging ourselves to be more efficient, focused and creative in looking at health care differently and less expensively, while leveraging innovation."