Minneapolis-based Fairview is eliminating 250 jobs through layoffs, attrition

Fairview Health Services is eliminating 250 jobs amid continued economic stress for hospital and clinic operators.

Staff were notified of the cuts on Thursday, the Minneapolis-based health system said in a statement to the Star Tribune.

Fairview is eliminating a mix of full- and part-time positions in specific areas throughout the health system, a spokeswoman said. It wasn't clear exactly how many workers were being laid off, since some of the jobs aren't currently filled.

The health system attributed the move to financial pressures that range from inflation and high labor costs to lagging payment rates from health insurers. Employees who are losing jobs will have "priority hiring opportunities for one of the 1,600 available positions in our system," James Hereford, the Fairview president and chief executive officer, said in an email to employees.

"These changes were done thoughtfully and in a focused way," Hereford said. "Strategic changes like this allow us to invest in the services we provide for our patients while supporting programs and care across our hospitals and clinics."

In July, rival Allina Health announced it would eliminate about 350 jobs and cited industrywide financial pressures, including trouble with patient discharges due to limited capacity at step-down facilities.

Hospitals and clinics across the Twin Cities have said they're feeling the same stresses, particularly from what analysts have described as a nationwide "labordemic" in health care.

Fairview, which is one of the state's largest health systems, employs about 34,000 people. Its operations are focused on the Twin Cities and the surrounding area plus medical centers in northern Minnesota. The health system's facilities include University of Minnesota Medical Center in Minneapolis and Fairview Southdale Hospital in Edina.

Fairview has posted operating losses for four consecutive years, while also reporting signs of financial improvement through the second quarter of 2023.

In his email to employees, Hereford said health system leaders recently decided to slow or pause hiring to make sure any new staff "were aligned with plans for 2024 and beyond." In late October, he announced changes for three top executives in the organization — Fairview's chief operating officer, the chief medical officer and the top human resources executive.

Beyond the job cuts announced Thursday, Fairview is working to control expenses, Hereford said, by reducing reliance on contract labor including traveling nurses.

"Taking a measured approach to evolve our cost structure and accelerate us toward our goals is important," Hereford said. "This includes steps to ensure our workforce is aligned to our future and continued delivery of the best possible patient care."

This summer, South Dakota-based Sanford Health called off a proposed megamerger with Fairview amid opposition from the University of Minnesota because the combined health system would have had its headquarters in Sioux Falls.

Fairview has owned the U's teaching hospital since 1997. The health system and university jointly operate M Health Fairview, which is one of the state's most prominent networks of hospitals and clinics.

Fairview and the U currently are negotiating over whether and how to extend their long-term affiliation agreement, which is set to expire at the end of 2026. The health system this year is providing about $100 million in financial support for the U's academic medicine mission, but Fairview officials have said the current agreement is not sustainable.

The university also has said it wants to regain ownership of University of Minnesota Medical Center from Fairview. In recent weeks, however, some U officials have backed off the ownership message, saying what the university really needs is increased governance and control of the teaching hospital.