Citing rising inflation and the uncertainty of federal funding, UC San Diego Health eliminated approximately 230 positions Monday, notifying its 14,000 employees of the layoffs in the late afternoon. And there were signs there could be more job losses at San Diego County’s other big health care systems.

The action came amid a nationwide wave of retrenchment in health care that, as some industry medical sources have documented, started in January, growing as the budget debate in Washington, D.C., focused on cuts to Medicaid, Medicare and benefits granted by the Affordable Care Act.

And those costs have inflated quickly, with vital workers who fought through the COVID-19 pandemic demanding better compensation, especially in California, where housing costs make it difficult for young and well-paid workers in the health sector to buy their first house.

Patricia Maysent, UC San Diego Health’s chief executive officer, said in an all-hands memo to staff Monday that the university health system’s financial picture demanded action.

“The decision was made in response to mounting financial pressures caused by federal impacts to health care, regulatory uncertainty and the rising cost of providing care combined with reimbursement rates from Medicare, Medicaid and commercial insurers that fail to keep pace with the true cost of care,” the memo said.

“We want to be clear: these decisions were not based on individual performance. We are deeply grateful for the service and dedication of every team member impacted.”

Maysent called the situation Monday “heartbreaking.”

“Today is a hard day,” she said. “Our leadership is very sad and solemn.

“We tried to get as much improvement out of not filling positions and (not hiring) contract labor as we possibly could. You try to pull as many of those levers first so you can minimize the impact to actual people in jobs.”

UC San Diego Health did not disclose precisely which positions have been eliminated, saying in a follow-up statement that the round of layoffs affected “managerial, administrative and patient care roles.”

About half of the workers who were notified they were to be let go were represented by unions. The American Federation of State, County and Municipal Employees, which represents service workers on campus, was affected, as was the California Nurses Association, the Teamsters representing skilled trades and the University Professional and Technical Employees local, which represents clinical research coordinators, clinical lab scientists, social workers and case managers.

Asked whether it might have layoffs coming, Chris Howard, Sharp HealthCare’s chief executive officer, said in a statement Monday afternoon that he could not rule out a similar move: “Like most health systems nationwide, Sharp HealthCare is facing financial pressures related to rising costs and insufficient reimbursement from governmental payers. Additionally, we are preparing for significant reductions in Medicaid payments as a result of the reconciliation bill currently being debated in the Senate in Washington, D.C. All prudent health care systems — Sharp included — must be prepared to implement appropriate strategies to address these current and impending challenges and ensure long-term sustainability.”

Chris Van Gorder, chief executive officer of Scripps Health, said that he would do “everything possible” to avoid layoffs, though the health system already has a “modified hiring freeze” in place that is limited to administrative positions.

State and federal budget cuts, though, could still force the matter.

“Once we understand the true scope of these cuts and the short- and long-term impact on our hospitals, we will develop contingency plans and take appropriate action,” Van Gorder said in an email Monday. “I do believe that California legislators will need to reconsider unfunded mandates, which just make hospital finances worse, and both regulatory and legislative relief to help or the situation will become even worse.”

Dr. Gene Ma, chief executive officer of Tri-City Medical Center in Oceanside, said no layoffs are in the offing at his establishment. Palomar Health in inland North County did not respond to a request for comment.

Local health systems appear to be operating in the black at the moment.

A quarterly financial statement for the University of California’s five medical campuses shows that all save UC Irvine, which recently purchased several community hospitals, are bringing in somewhat more money than they are spending. UC San Diego Health has posted a 4.1% operating margin for the first nine months of its fiscal year, though that number is 1.5 percentage points less than it was for the same nine-month period in fiscal 2024.

Overall, UC San Diego Health’s operating margin is about 1% better than the average of all five systems, which collectively had an operating margin of 2.9%.

Why, workers might ask, are layoffs necessary if UC San Diego Health is not yet operating in the red?

Maysent said the administration must make sure that it is able to meet its financial obligations in a climate of financial risk that has only become less certain as Congress contemplates major changes to the programs that support care for millions of Americans.

“Every single year we have had to figure out where we’re going to come up with, you know, about $150 million in order to match inflation,” Maysent said. “You can get those improvements through better payer contracts and through growth, which has always been our magic because, as long as we’re growing, it’s easier to cover that gap.

“Of course, the other way is through hard management of our expenses, and this year we just haven’t been able to pull out enough of the expense. We’re still doing fine, but we’ve got to manage for the long-term sustainability of the system.”