Louisiana’s Biggest Hospital System Lays Off 770 People

Lake Charles Memorial Hospital, Louisiana. (Courtesy of Alesha Alford)

Louisiana’s largest hospital system and one of its largest private employers, Ochsner Health, plans on laying off 770 employees.

The job cuts will affect 42 hospitals and more than 200 urgent care and health centers in Louisiana and Mississippi.

Ochsner CEO Pete November wrote in a May 11 email to employees (pdf) that the cutbacks would not affect doctors, nurses, and other patient-care staff, but mainly those employed in management, administrative, and clerical positions.

The staff reductions will be spread evenly across the institution’s facilities in both states, and any impacted employees with active clinical credentials will be offered direct patient care roles.

Meanwhile, hospitals in Louisiana that have affiliation agreements with Ochsner will not be affected by the layoffs, including St. Tammany Parish Hospital, Slidell Memorial Hospital, Terrebonne General Health System, and Christus Health in Lake Charles.

Healthcare Operators Cutting Staff Post-Pandemic

The layoffs are the largest in the health care operator’s history and represents 2 percent of of its 38,000-person workforce, after it saw its first negative quarterly results in over a decade.

The firm is one of the 36 American health care operators to layoff staff since the beginning of the year, on top of the 35 providers which already slashed their workforce in the latter half of 2022, according to industry data.

The layoffs at Ochsner are happening at the same time as a labor shortage for nurses and other medical staff.

At least 800 nursing positions remain unfilled, which has led to an increase in the cost of providing patient care, according to November.

“We recognize this will be difficult on people impacted and people here, and we will do the best we can to support them,” November said.

Ochsner is giving laid-off employees over 60 days of benefits and pay, plus a severance package.

“Each impacted full and part-time employee will continue to receive full pay and benefits for up to 65 days, depending on their work schedule, in addition to severance packages for full-time and part-time employees,” said the CEO.

The CEO said that employees impacted by the cutbacks would immediately receive a calendar appointment to assist them in finding new employment.

“We will also offer career support, wellness resources, and details on how to apply for other job opportunities within Ochsner.”

Hospital System Expenses Rise Nationwide

The hospital operator will not close or consolidate any of its facilities, which are concentrated in New Orleans region, including Baton Rouge, Lafayette, Lake Charles, Shreveport, and the Mississippi Gulf Coast.

Overall hospital labor costs have risen 9 percent after the federal government stopped covering the pay of travel nurses, which have skyrocketed by 80 percent due to high demand during the pandemic.

From 2019 to 2022, the Louisiana company saw its bills for medical supplies, equipment, and drugs increased by 10 percent.

“Health care providers across the country have experienced increased labor costs, a shortage of patient care clinicians, high inflation, and the end of pandemic-relief funding from the government,” November wrote.

However, the cutbacks are expected to save the company between $125 million and $150 million a year, as health care costs skyrocket post-pandemic.

“As an organization whose core values are rooted in putting our patients and people first, this is not a decision our executive leadership team takes lightly or one we ever wanted to make," November wrote.

“It is the hardest change we have ever had to make at Ochsner, but one we must to ensure we continue to be a strong organization.”

November, who took the top job at the nonprofit hospital system last year, vowed that these cuts will be the first and the last.

“We want everyone to know that when we are finished with this round we are done. This is it,” he told reporters, adding, “folks do not have to come to work every day worried about what comes next.”

Louisiana Health Care Provider Takes Losses After Decade of Growth

Although its revenues grew to $6.4 billion last year from $5.9 billion in 2021, Ochsner still lost $96 million in 2022, as total expenses exceeded revenues by 1.5 percent.

Ochsner had witnessed massive growth over the past decade under its previous CEO, Warner Thomas, who resigned in November 2022 to take over California-based Sutter Health.

The health care system grew from eight hospitals in 2012 in the New Orleans area to 48 hospitals and 300 clinics, across Louisiana and Mississippi by 2023.

As recently as February, the company opened a new $110 million three-story medical complex at the Clearview Shopping Center in Metairie, Louisiana.

November said that 10 years of expansion allowed Ochsner to keep operating through the difficult situation at the present, adding, “our growth allows us to scale and adapt.”

Industry experts say that hospital operators like Ochsner will likely make more job cuts due to a combination of rising labor and drug costs and slower growth in Medicare and Medicaid reimbursement rates.