Oakland’s Alameda Health System canceled 92 planned layoffs after Alameda County approved $19.3 million in emergency funding.
The funds, part of the county’s fiscal 2026-27 budget adopted June 25, will also cover an outside performance audit and extend two behavioral health programs through October 31.
Funding closes a $100 million budget gap
The health system faced a $100 million deficit for the coming fiscal year, as outlined in a June 22 letter from county supervisors. Last November, its board approved reductions affecting 372 employees, expecting cuts in federal funding under H.R. 1, a 2025 reconciliation law.
Voluntary departures, early retirements, and vacant positions had already trimmed the layoff list to 120 full-time roles. The county’s allocation eliminates the remaining 92 cuts and keeps two behavioral health programs running for an additional four months.
The programs—partial hospitalization and intensive outpatient care—serve patients needing more support than traditional outpatient treatment but less than inpatient hospitalization. Alameda Health System stated these services aren’t financially sustainable without external funding.
The county’s health director will review whether the programs can continue under the system by September 30. If not, officials will find alternative providers, create a patient transition plan, and assist the 28 affected employees in securing other county positions.
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Audit aims to resolve billing disputes
The performance audit, funded by the county, will assess the health system’s revenue cycle and operations for potential savings. County officials said the review also intends to settle disagreements between leadership and labor representatives over recoverable revenue through improved billing and collections.
Alameda Health System runs four hospitals and nine clinics, including the East Bay’s only Level I trauma center at Wilma Chan Highland Hospital. Over 90% of its patients receive subsidized care, and 63% of its charges go to Medi-Cal.
Service Employees International Union Local 1021, representing many of the system’s employees, called the funding decision a win for patients and workers. The union noted that 82 of the saved positions belonged to its members.
For now, the layoffs are canceled. However, the system’s financial future remains unclear, particularly as federal Medicaid changes take effect. Safety-net providers nationwide are preparing for more uncompensated care, with some rural hospitals already facing revenue losses in the hundreds of millions.
In New Orleans, LCMC Health warned its debt could double if patients lose coverage, shifting the system from positive to negative margins. A 2025 study identified 55 rural hospitals at risk of closure, with independent rural hospitals expected to lose $465 million in patient revenue next year.
The county’s funding provides temporary relief. Yet the core challenge remains: sustaining essential services when resources run low. Many providers are exploring ways to manage rising costs while maintaining care quality.