The San Diego-based non-profit health care system Scripps Health is set to pursue layoffs in a restructuring process in 2018. Scripps missed its annual budget by $20 million and intends to target lower costs and a greater dependence on caring for patients outside of its hospitals. The company’s CEO, Chris Van Gorder, revealed in a memo that the cuts are necessary with insurers and patients increasingly targeting lower prices as health costs rise. The announcement by Scripps follows in a cost-cutting trend amongst large health care organizations; both Advocate Health of Illinois and Tenet Health announced similar measures following disappointing results. Although Scripps maintains a $2.6 billion balance in cash and investments, with an increased profitability of $350 million, its operating margin has slimmed from 2.3 percent in 2012 to 9 percent in 2017. The firm believes that it would not be responsible management to turn the savings towards a recurring problem especially as it requires favorable interest rates from lenders on its $2.6 billion building project. Alongside the personnel cuts intended to save $30 million in the current budget year, there will be a consolidation of management positions.
The San Diego-based non-profit health care system Scripps Health is set to pursue layoffs in a restructuring process in 2018. Scripps missed its annual budget by $20 million and intends to target lower costs and a greater dependence on caring for patients outside of its hospitals. The company’s CEO, Chris Van Gorder, revealed in a memo that the cuts are necessary with insurers and patients increasingly targeting lower prices as health costs rise. The announcement by Scripps follows in a cost-cutting trend amongst large health care organizations; both Advocate Health of Illinois and Tenet Health announced similar measures following disappointing results. Although Scripps maintains a $2.6 billion balance in cash and investments, with an increased profitability of $350 million, its operating margin has slimmed from 9 percent in 2012 to 2.3 percent in 2017. The firm believes that it would not be responsible management to turn the savings towards a recurring problem especially as it requires favorable interest rates from lenders on its $2.6 billion building project. Alongside the personnel cuts intended to save $30 million in the current budget year, there will be a consolidation of management positions.