Consultant explains recent hospital layoffs, what could be in South Dakota’s healthcare future

SIOUX FALLS, S.D. (Dakota News Now) -Layoffs at medical facilities have been sweeping across the nation, and now it’s happening in South Dakota.

Michael Wyland is a consultant to non-profit organizations, including hospitals.

“Sanford and Avera are both are in the six to seven billion a year range in terms of revenue. People think, well, that’s a huge amount of money,” said Wyland. “They’ve got all the money in the world. You know, just because there’s money there doesn’t mean there’s profit there.”

Wyland, the co-owner of Sumption and Wyland, says many hospital systems are facing financial difficulties.

“The American Hospital Association is saying that, even with COVID support money from the federal government, a third of all hospitals in the country right now are losing money,” said Wyland.

Healthcare systems are facing post-covid finances.

“The pandemic support is ending pretty soon. Hospitals aren’t going to get any richer anytime soon. If anything, they’re going to have to tighten their belts even more,” said Wyland.

Rising costs of inflation are affecting payroll and purchasing.

“The thing that’s gone way up because of inflation is supplies and materials,” said Wyland.

Beckers Hospital Review representatives of Chicago is referring to a report released this week from Kaufman Hall. Based on a response from 86 health system leaders, 46 percent said labor costs are the largest opportunity for cost reduction -- up significantly from the 17 percent of leaders who said the same last year.

Molly Gamble, Vice President of Editorial for the publication, says, “Between health systems’ narrowing margins and the looming risk of a recession, job cuts and layoffs in hospitals and health systems are likely to coincide with a steady demand for employees who provide patient care. Job cuts at hospitals may seem counterintuitive right now, given the nation’s widely known shortages of healthcare workers. But as hospitals and health systems whether one of their most financially difficult years, more are reducing their administrative staff, eliminating vacant jobs, and reorganizing or shrinking their executive teams to reduce labor expenses,” said Gamble.

Wyland believes more changes could be coming.

“You’ll see more nurses and nurse practitioners and physician assistants taking the lead and patient care,” said Wyland.

More considerable changes may be on the horizon.

“We’ll see another round of mergers and acquisitions in the healthcare field that had largely gone away in the last two or three years. That will allow them to operate on a lower profit margin than they currently operate or simply go from being unprofitable to becoming profitable,” said Wyland.

Your hospital bills may also increase. The consumer price index report indicates the cost of receiving medical care in the last year has increased by 5.5 percent compared to the previous year in the midwest.

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