Providence cuts leadership team, operations to save money

Providence, a Washington-based not-for-profit health system, is shrinking its executive team and streamlining some functions as it faces operational challenges.

Providence cited worker shortages, inflation, supply chain disruptions and limited insurance reimbursements as reasons for the changes. The system will reduce overhead costs with fewer executives and funnel more financial resources toward frontline staff, equipment and supplies, a spokesperson said.

The new operating model condenses Providence’s seven regional divisions into three. Erik Wexler, formerly president of strategy and operations for Providence’s southern regions, will oversee the divisions as chief operating officer. Lisa Vance, president of strategy and operations for northern regions, announced her retirement a couple of weeks ago, prompting Providence to transition to one operations role, the spokesperson said.

Providence, with 52 hospitals, more than 900 clinics and almost 120,000 employees across seven states, is also consolidating leadership for its physician enterprise, ambulatory care network and clinical institutes into one team. Dr. David Kim, who oversaw the physician enterprise business, will lead that team.

A spokesperson said the health system primarily is looking at internal candidates for other divisional leadership roles. She did not provide details on how many executives would be moved into new roles or leave the system.

Other cost-cutting strategies include managing patients’ length of stay, reviewing real estate, reducing discretionary spending and diversifying revenue streams.

Providence doubled its operating losses in 2021, compared with the prior year. In the first quarter, its operating expenses exceeded revenue by $510 million. It reported $330 million in non-operating losses, not including losses from ending its affiliation this year with Hoag, a California healthcare network. Hoag filed a lawsuit in 2020 to split from Providence, seeking to end a nearly decade-long partnership.

Providence continues to recruit frontline workers, including registered nurses, as part of a $220 million workforce investment announced last year to fund bonuses for employees and recruitment efforts, according to a news release.