Alameda Health System to Lay Off Hundreds in January After Massive Federal Cuts

In anticipation of the Trump administration’s major cuts to Medicaid, the Alameda Health System, which runs public hospitals and clinics throughout the East Bay, is planning to lay off nearly 300 people in January.

It’s one of many healthcare systems around the state and nation threatened as a result of significant expected losses in revenue from Medicaid, the nation’s insurance system for lower-income people, known as Medi-Cal in California.

However, some union employees of the health system have said layoff notices, which are expected on Jan. 6, are premature, as the financial impacts of the cuts have yet to be felt.

“I think they’re bowing to pressures before those pressures have actually come into play,” Reilly Gardine, a clinical dietitian at Wilma Chan Highland Hospital Campus in Oakland, told KQED on Monday. “And I think they’re not being creative enough in figuring out alternative ways for funding.”

The health system, in an emailed statement to KQED, said it expects to lose “more than $100 million annually by 2030,” due to H.R. 1, the tax and spending bill President Donald Trump refers to as “Big” and “Beautiful.”

The total annual budget for AHS is roughly $1.4 billion, according to its budget documents. The system could face an additional potential $60 million in cuts annually in the coming years due to cuts to federal funding that allows states to pay hospitals who treat a large share of Medi-Cal patients, officials said.

“AHS projects that cash will run out by approximately August of 2026 without immediate action,” the statement said. “In order to be proactive and ensure that AHS can continue to provide a range of emergency and comprehensive care, AHS has made the painful decision to reduce some services, reduce its workforce, and eliminate certain programs.”

Veronica Palacios, an eligibility specialist, and a chapter leader with labor union SEIU 1021, said workers have not been given a clear reason why the cuts need to be made now.

“Because if it’s being done right now and it’s not necessarily needed at this point, it sounds like you’re purposely cutting services to the community. Why do that?” Palacios said.

The cuts were initially planned to go out on Dec. 24, which Gardine called “insulting,” and which Palacios said sows chaos among workers when they should be spending time with family during the holidays.

In what appeared to be a response to pressure from union members, the health system said late Monday it would delay the notices until Jan. 6.

Palacios said the layoff notices will send workers into “damage-control” mode.

“How am I going to support my family, how am I going to survive? Can I get another job if this is happening with our health care system? Is this happening throughout the state of California?” she said, reflecting her colleagues’ concerns. “They’re stressed out, they’re worried, they’re afraid of what the what ifs.”

The health system said the 296 people it needs to lay off will be from “departments and disciplines across the system including management, support and administrative services, and clinical care,” and that those that are affected will have access to job search assistance and resume writing guidance. Some will receive severance packages.

“AHS leadership continues to pursue multiple strategies to restore funding and strengthen sustainability,” the agency’s statement said. “We are working in partnership with federal, state and county leaders to hopefully mitigate these adverse conditions.”

Gardine said before resorting to layoffs, executives at AHS should take pay cuts, and explore other options, such as ending leases at pricey office buildings in downtown and the Jack London areas of Oakland. The system should also consider hiring more permanent staff instead of relying on traveling contractors.

“The resources are there, the state of California is an incredibly wealthy state. So, the fact that we are cutting essential services for our most vulnerable communities is completely outrageous,” Gardine said. “I think we have a huge fight ahead and that I think there’s a lot of us who are ready to start fighting.”