California’s Alameda Health System Plans to Lay Off Nearly 300 Employees
Alameda Health System (AHS) in Oakland, California, has announced plans to lay off 296 employees across all departments, with notifications scheduled to begin January 6, 2026.
The cuts will affect staff across administrative services, clinical care, management, and support roles, creating significant concerns for patient care delivery and workforce stability.
The impending layoffs have sent ripples of anxiety through the community, as AHS is a critical provider of healthcare services in the region, serving a diverse and often underserved population.
The layoffs are tied to federal funding losses from the One Big Beautiful Bill Act. In their 2025 financial report, Alameda said it is projected to lose more than $100 million annually as a result.
“Due to these significant external cuts in funding, AHS must take a proactive approach to decreasing its organizational expenses, including labor expense,” a statement from AHS read.
The One Big Beautiful Bill Act (H.R. 1) includes changes to Medicaid eligibility and funding mechanisms that AHS leaders say are expected to significantly reduce future reimbursement and federal support for safety-net hospitals.
For AHS, where about 60% of patients are covered by Medi-Cal, California’s version of Medicaid, this is like pulling the rug out from under an already wobbly table.
To make matters worse, cuts to the Medicaid Disproportionate Share Hospital (DSH) program are projected to reduce AHS’s funding by up to $60 million annually starting February 2026. State-level cuts may also be on the horizon, Beckers reports.
The cuts are part of a broader trend of decreasing federal and state support for safety-net hospitals, which rely heavily on government funding to provide care to low-income and uninsured patients.
Alameda said that it is pursuing “multiple strategies” to restore funding and is working with leaders at every level of state, county, and federal government to come up with solutions.
In the meantime, the AHS is offering voluntary resignation programs, retirement incentives, and resume help for those affected. Unionized employees will also receive a severance package.
People in California are expressing concern about how the changes could affect the community, as Alameda is a safety net hospital that serves many underserved and low-income patients.
While Alameda might just be one healthcare system, the financial strain on AHS is indicative of a larger crisis facing many healthcare systems across the country, so 2026 could reveal more cuts as healthcare systems navigate the changes from the OBBA’s new laws.
