Hoag Hospital announced plans Tuesday to lay off about 175 employees.
Accounting for about 3.5% of its 5,000-person workforce, the cuts will affect its hospitals in Newport Beach and Irvine as well as its network of health-care centers, according to Nina Robinson, vice president of corporate communications.
The layoffs were a result of "the weak economy, high unemployment" and insurance payment changes, according to a written statement.
None of the hospital's 1,400 physicians will be affected.
Most of the cuts will be among non-clinical staff members, such as medical billers, administrative assistants and human resources professionals.
Last year, Hoag opened a hospital in Irvine, hiring about 900 people in the process.
"Today's hard choices will correctly size our organization to the needs of our community, and allow Hoag to emerge from this challenging economic environment stronger and more effective," Robinson said in the statement.
Amid the slumping economy, hospitals nationwide are coping with shifting health-care models and changes in insurance payments, experts say.
Technology has increased outpatient care, prompting declining hospital admissions. Also, more uninsured people are unable to meet their hospital bills and Medicare may soon upend its current payment system.
"It turns out that hospitals are not immune to economic downturns," said Professor Paul Feldstein, who specializes in health-care management at UC Irvine's Paul Merage School of Business.
One possible insurance change hospitals are planning for is bundling – the consolidation of Medicare payments for an episode of care like a heart attack, Feldstein said.
If the system is adopted, the government would make one payment instead of separately reimbursing hospitals, doctors and post-hospital caregivers.
"That's making them reevaluate their business model," Feldstein said, moving away from "getting them in the hospital and keeping them there."
Hoag has recently tried to keep up with the outpatient care trend by opening a regional network with seven health centers and the hospital in Irvine.
But the added economic pressures accelerated the need to change its structure, and to shed jobs, according to Hoag's statement.