Oregon Health and Science University (OHSU) delivered a disheartening message to its staff on Thursday, announcing plans to lay off at least 500 employees. The decision comes as OHSU grapples with financial challenges, citing a discrepancy between its revenue and the increasing costs of supplies and labor. The hospital’s management will initiate discussions regarding workforce reductions following an upcoming annual review and contract renewal process.
Although the exact number of layoffs is not specified in the letter, OHSU assures that the review process will adhere to the federal Worker Adjustment and Retraining Notification (WARN) Act. The act mandates that employers provide a minimum of 60 days’ notice before implementing layoffs that affect 500 or more employees at a single location. As of now, OHSU has not been listed in Oregon’s WARN notice list.
This news emerges as OHSU sets its sights on a merger with Legacy Health, leading to the formation of a combined entity called OHSU Health. The merger plans were announced last year, and a binding agreement was recently signed. OHSU Health is projected to become the largest employer in the Portland area, employing approximately 30,000 individuals.
According to a summary of the merger terms posted on OHSU’s website, all current employees of both OHSU and Legacy will become part of the combined system. Additionally, OHSU commits to refraining from workforce reductions for at least the first six months after the merger’s completion, although the possibility of future layoffs is not ruled out.
While the merger is still undergoing the regulatory process and is expected to take several months to finalize, the impending layoffs at OHSU are scheduled to occur within the next 90 days, as stated in the letter. The hospital initially alerted its staff of potential cost cuts and layoffs back in May.
The current round of layoffs is likely to raise concerns about OHSU’s financial stability leading into the merger. OHSU addressed these concerns in a Q&A section on its website, acknowledging the financial challenges it faces and assuring stakeholders that it has built up its capital capacity over the past 15 years to facilitate borrowing funds for the Legacy acquisition.
The layoff announcement letter, signed by OHSU President Danny Jacobs and eight members of the executive leadership team, also addressed questions regarding the financing of the Legacy merger. It clarified that the planned 30-year bonds intended to finance the merger cannot be utilized to bridge the gaps in OHSU’s fiscal year 2025 budget or to compensate its members.
