Baylor Scott & White Health to lay off 102 finance workers and outsource their duties to India

Baylor Scott & White Health, the state’s largest not-for-profit hospital system, is laying off 102 employees in finance and accounting as part of a broader effort to contain costs for the pandemic and beyond.

The company confirmed the duties would be outsourced to workers in India. A spokeswoman said 18 of the Baylor employees would be offered positions with the vendor providing the services.

The cuts follow a much larger round of layoffs in June, when about 930 Baylor employees were ultimately let go. At that time, the company also cut the pay of 300 senior leaders, including reducing the salaries of both the CEO and president by 25%.

The June layoffs and pay cuts were in response to the pandemic, which led to a sharp decline in patient volumes after the economy was locked down and elective surgeries were temporarily halted.

The latest reductions are part of a broader, ongoing effort to free up resources for higher priorities, including preparing for disasters such as the COVID-19 outbreak, said Baylor president Peter McCanna.

“We’ve got to find ways to become more efficient,” McCanna said. “Can we find efficiencies in things like administrative services and make that work for us?”

He said the Dallas-based company has a long list of funding initiatives considered crucial to its mission of providing quality care to its patients. At the top, especially during the pandemic, is to beef up the number of frontline caregivers.

“Right now we’ve got 2,000 open clinical positions — doctors, nurses, respiratory therapists,” McCanna said.

Dr. Philip Huang, director of the Dallas County Health Department, distributes a flu vaccine to Armando Sanchez during a January health fair in Dallas. Texas ranks near the bottom in many measures of health care access and affordability, in part because 1 in 4 adults statewide does not have health insurance.

Many Baylor hospitals are nearly full because of the spike in COVID-19 cases statewide, he said, and some facilities are rescheduling procedures to preserve resources for COVID patients.

The coronavirus has made disaster preparedness a top concern, and that requires investing in excess capacity so the health system has the supplies and personnel to meet the next crisis.

In addition, Baylor is investing more in medical education, research and clinical trials. It’s expanding access to primary care, especially for the uninsured. And it’s building up digital tools, from apps for patients to virtual visits and home care.

Cutting costs in non-core areas, such as financial reporting and accounting, will help pay for future growth, McCanna said. He added that it’s “fairly common” for large companies to outsource part of that work.

Almost two years ago, Farmers Branch-based Tenet Healthcare said it planned to offshore over 1,000 jobs.

“Expect us to continue to redesign what we do to transform this organization, but that doesn’t mean we’re going to have fewer people,” McCanna said. “We actually expect to be larger and have more people working for Baylor Scott & White, providing care to more patients.”

Baylor has 52 hospitals, hundreds of clinics and about 48,000 employees, including joint ventures. In fiscal 2020, Baylor facilities and employees handled over 7 million patient encounters and clinic visits, and they delivered 30,000 babies.

Baylor’s total revenue topped $10.5 billion for the year ended in June, a gain of 4.7% despite the pandemic.

Alan Calvillo received a flu shot during a January health fair in Dallas. The Dallas-Fort Worth region has high health care prices and usage of health services has declined, according to a study of insurance claims.

Last month, Baylor said it was teaming with the Baylor College of Medicine in Houston on a new regional medical school campus in Temple. The 20-year commitment is aimed at reducing the doctor shortage in Texas and fostering more clinical innovation, officials said.

In October, the company announced the Baylor Scott & White Quality Alliance was teaming with Catalyst Health Network, bringing together two giant physician groups. They said they want to create more affordable health care options for employers and others who often go without insurance. Together, the two organizations have thousands of doctors providing care for about 1.75 million lives.

Patrick Zagar, a credit analyst in Dallas for S&P Global Ratings, said Baylor has been working on “a pretty robust operating improvement program” for several years

“It’s performed well for them,” Zagar said. “And that’s really the standard across the (health care) industry — to have that continuous improvement focus ingrained in your culture and always be looking for how to operate more efficiently.”

Baylor has weathered the pandemic downturn better than most large peers, he said. In the quarter ended in September, revenue rebounded and operating income reached a new high. But the pandemic is threatening again, creating more uncertainty for providers.

“The time horizon is getting shorter and cloudier,” Zagar said. “Management teams have to stay proactive with managing their cost base and managing their expenses.”

At its medical center in Temple, Baylor Scott & White Health is teaming with Baylor College of Medicine on a new regional medical school campus.

Emergency room visits drive up the cost of health care, especially when the trips could be avoided. Two large networks of providers, the Baylor Scott & White Quality Alliance and Catalyst Health Network, are teaming up to offer new coverage that emphasizes primary care -- and a better value in health spending.

Last year, Baylor Scott & White Health reported over $10 billion in revenue and $725 million in operating profit. The Dallas company's numbers have strengthened despite a decline in hospital admissions.
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