Tower Health adds to Philadelphia-area health-care layoffs as industry struggles financially

Tower Health told employees Thursday that it was laying off 45 people and eliminating an additional 55 positions that are either vacant or will be soon as people retire or leave voluntarily.

The announced cuts add to a string of relatively small Philadelphia-area health-care layoffs, as the industry attempts to adapt to higher costs for wages, pharmaceuticals, and other supplies that have not been fully offset by increases in government and private insurance payments.

Most of the affected positions are in management or involve employees who don’t provide clinical care, Tower’s chief operating officer Michael Stern said in email to employees. The nonprofit based in West Reading, Pa., owns four hospitals, including St. Christopher’s Hospital for Children, in a joint venture with Drexel University

Tower, which also owns Reading, Phoenixville, and Pottstown Hospitals, employs 12,000 people.

Stern, who joined Tower Health in September, said the cuts are expected to trim $12 million a year from costs at Tower, a system with $2 billion in annual revenue that has lost large amounts of money in recent years.

“Healthcare providers regionally and nationally are working through very difficult financial challenges. Tower Health is no exception. While we are making progress, the effort to improve our financial performance must remain a constant focus,” Stern said.

Last fall, Tower laid off 52 people from its corporate staff in West Reading, citing its need to retrench after the closures of its Brandywine and Jennersville Hospitals, both in western Chester County, and the sale of its Chestnut Hill Hospital to a group led by Temple University Health System.

Even financially strong hospital operators such as the nonprofit University of Pennsylvania Health System are cutting jobs to keep ahead of financial pressures.

Penn announced internally in February that it had cut ”a small number of administrative positions” as part of an effort to reduce corporate overhead by $40 million annually. The system had $9.2 billion in revenue in the fiscal year ended June 30. Penn Medicine employs about 40,000 people.

The corporate changes at Penn included the consolidation of medical malpractice insurance companies and legal departments, which had long existed separately at some of the hospitals Penn acquired.

Then last month, Lancaster General Health, which Penn has owned since 2015, announced the layoff of “fewer than 65″ of its 9,700 employees, according a report in LNP/Lancaster Online.

On the plus side, Penn this week announced 4% raises for health-care staffers.

Another small layoff occurred recently at the Rothman Orthopaedic Institute. The Philadelphia-based private practice, which has offices in four states, laid off 18 people from its corporate staff last month. Rothman employs 1,800.

Crozer Health, in Delaware County, announced a larger layoff of 215 people, or 4% of its workforce, as part of long-running effort to contain losses.

Crozer’s financial woes stem in part from the sale of its real estate for $420 million in 2019 when it was under the control of Leonard Green & Partners as part of a $1.55 billion deal in which Prospect hospitals in three states had to rent back their buildings from a real estate investment trust. That sale effectively loaded the hospitals with debt.