OHSU Announces Layoff of at Least 500, Weighs Cuts to Benefits

Staff reductions come as the public research university plans to purchase rival Legacy Health for $1B.

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Oregon Health and Science University will lay off hundreds and make deep cuts to employee benefits as it contends with rising staff and supply costs.

OHSU president Danny Jacobs discussed the layoff plans in a June 6 internal email, as first reported by Willamette Week. The university is primarily eying its contract workforce and workers in research-related positions, Portland Business Journal later found.

“Our expenses, including supplies and labor costs, continue to outpace increases in revenue,” Jacobs wrote in the email. “Despite our efforts to increase our revenue, our financial position requires difficult choices about internal structures, workforce and programs to ensure that we achieve our state-mandated missions and thrive over the long term.”

OHSU cannot yet provide firm figures for layoffs or cuts to benefits, according to spokeswoman Sara Hottman. Reductions in the fiscal year 2025 budget will be discussed Friday at the meeting of the school’s Finance and Audit Committee.

The cuts come as OHSU pursues a $1 billion plan to purchase rival Portland health system Legacy Health. If that deal is approved by state and federal regulators, it would create the largest employer in Portland with more than 32,000 employees.

After merger plans were announced last year, the Oregon Nurses Association expressed cautious optimism, saying the health system should focus on reaching a contract agreement with its nurses before making any acquisitions. (The union did ratify a tentative agreement in October.) Since layoffs were announced, OHSU employees have asked how the university can afford to purchase Legacy Health but not fund its own employee benefits.

Jacobs defended the cuts in the June 6 email, writing that OHSU hopes to borrow 30-year bonds to finance the Legacy purchase.

“These capital dollars cannot be used to close gaps in our fiscal year 2025 OHSU budget or to pay our members,” Jacobs wrote. “Although we believe expanding OHSU’s overall footprint will help alleviate capacity issues and help us financially, budget projections for fiscal year 2025 (beginning July 1) and fiscal year 2026 require us to make challenging decisions now.”

For now, employees contend with uncertainty. Around 142 OHSU employees have already received notifications their contracts won’t be renewed. More cuts will come in the next three months, the university has said. A federal law requires large employers to notify the U.S. Department of Labor when it plans to lay off at least 500 people, which OHSU, which employs 21,300 people, has done in this case.

The Oregon Nurses Association, which represents 4,500 OHSU employees, said in a statement the university needs to get its priorities straight and focus on expanding services. The president of AFSCME Local 328 is quoted as saying the cuts are especially galling because OHSU is a premier health care provider in the region. AFSCME has so far gathered 3,000 employee signatures for a petition to management.

Critics also decried a recent $350,000 retirement bonus for Jacobs.

The layoffs and benefit cuts represent a reversal of fortune from a year ago. Last summer, in addition to the announcement of a billion-dollar merger, OHSU paid $15 million in bonuses to 2,000 non-union employees, according to WW. The bonuses were intended as a thank-you and not connected to performance.

All industries are now contending with significant increases in the cost of employee benefits. OHSU needs to cut $12 million from its budget by the end of the year to reach its targeted savings or risk further cuts. But more is needed to balance the teaching hospital’s budget, WW reports. An OHSU official in March told staff the cost of benefits could rise 8% in the next year and without cuts, would rise 11.5%. Employee paycheck contributions could rise by around $1,000. Options for keeping costs growing include higher deductibles and higher co-pays for doctor visits.

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