Allina Health is cutting about 350 jobs amid financial challenges

Allina Health System has cut about 350 jobs as it faces unprecedented financial pressures industry-wide, the Minneapolis-based hospital and clinic operator said Monday.

The job cuts began on Monday. Most of the dismissed employees are not medical care providers, Alina wrote in a statement. The health system said workers will receive severance pay, health benefits and outside employment resources.

Allina is one of the largest providers of healthcare in Twin with more than 28,500 full and part time employees at the end of last year.

“Allina Health, like many health systems across the country, is facing unprecedented financial challenges,” the health system wrote Monday in a statement. “Our focus remains on ensuring that we remain a sustainable asset to the community for years to come.”

Kaufman-Hall Healthcare Consulting Firm I mentioned last month Hospital operating margins returned to positive territory in May but remained well below historical standards.

Its monthly rapid survey with national data reports that “discharges, emergency department visits and operating room minutes are all up, although very modestly year-over-year.”

“Revenues from outpatient care are growing at a much greater rate than revenues from inpatient care,” the study said. “While labor costs remain significant, expenses in May were well below comparable levels from May 2022.”

Earlier this month, Allina announced that economic problems had forced it to put a hold on construction of a replacement hospital at Cambridge Medical Center in Esante County. In a statement, the health system said it hopes to “find a way forward to create and invest in campuses.”

In May, Allina reported a first-quarter operating loss of $101.6 million. The nonprofit group’s chief financial officer said the results reflect the industry’s problems with rising labor costs and an inability to offload patients to step-down facilities, such as nursing homes.

Alina said in May that insurance payments did not keep pace with expenses, including inflation, in supply costs. In addition, hospital emergency rooms have been increasingly treating patients who don’t necessarily need hospital-level care but don’t have access to alternative centers, the CFO said.

The health system has been “working for several months to return to financial sustainability. Despite the cost-cutting measures already put in place by Allina Health and the significant efforts of our teams, we have reached a tipping point that requires us to take decisive action,” a spokeswoman said Monday via email.

Allina operates 10 hospitals including Abbott Northwestern in Minneapolis and United Hospital in St. pee.