Allina Health System is eliminating about 350 jobs as it faces unprecedented industrywide financial pressures, the Minneapolis-based operator of hospitals and clinics said Monday.
The job reductions began Monday. Most of the eliminated employees are not medical care providers, Allina wrote in a statement. The health system said workers will be offered severance pay, health benefits and outplacement resources.
Allina is one of the largest health care providers in the Twin Cities 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 we remain a sustainable community asset for years to come."
The health care consulting firm Kaufman Hall reported last month that hospital operating margins moved back into positive territory in May but remain well below historical norms.
Its monthly flash survey with nationwide data reported that "discharges, emergency department visits and operating room minutes all climbed, although very modestly on a year-to-date basis."
"Revenue from outpatient care is increasing at a much greater rate than revenue from inpatient care," the survey 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 construction of a replacement hospital on hold at Cambridge Medical Center in Isanti County. In a statement, the health system said it hoped to "find a path forward to create and invest in the campus."
In May, Allina reported a first-quarter operating loss of $101.6 million. The nonprofit group's chief financial officer said the results reflected industrywide problems with high labor costs and an inability to discharge patients to step-down facilities, such as nursing homes.
Insurance reimbursements hadn't been keeping up with expenses, including inflation, in supply costs, Allina said in May. Plus, hospital emergency rooms increasingly were treating patients who didn't necessarily need hospital-level care but can't access alternate centers, the chief financial officer said.
On Monday, a spokeswoman said via e-mail the health system had been "working for several months to return to financial sustainability. Despite the cost-cutting measures Allina Health has already put in place and the great efforts of our teams, we have reached a critical point that requires us to take decisive action."
Allina operates 10 hospitals including Abbott Northwestern in Minneapolis and United Hospital in St. Paul.
