Providence has implemented a hiring freeze for nonclinical roles as the health system struggles to reach profitability.
President and CEO Erik Wexler expressed concerns for the company's financial challenges in a Thursday memo to employees. He emphasized the need for action as expenses continue to outpace revenue. Wexler noted issues with low reimbursement rates, high labor and supply costs, the Crowdstrike outage and Los Angeles wildfires.
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"Over the last three months, the economic headwinds have shifted rapidly, forming a perfect storm that threatens our financial sustainability," Wexler said in the memo. "We were on track to finally break even this year. But just as we were nearing that goal, the external economic conditions in 2025 took a sudden turn."
In addition to the hiring freeze, Providence is also restricting nonessential travel, filing lawsuits against payers over repeated denials, advocating for state and federal funds, and pursuing partnerships such as the Compassus joint venture to manage resources more effectively.
Renton, Washington-based Providence isn't alone in its efforts to cut costs. Health systems have cut hundreds of nonclinical jobs this year in response to rising costs and low reimbursement rates, while also weathering the uncertainty surrounding federal funding.
Wexler said Providence will work to standardize care, avoid duplicate resources and assess whether programs still make sense as in-house operations at the organization.
He has made big changes since taking over as CEO in January.
Earlier this year, Providence consolidated marketing, strategy and planning functions, while also realigning leadership across multiple areas. Wexler said the system has 46 fewer leadership roles since the end of last year.
He also formed the office of transformation, which focuses on technological capabilities to reduce administrative burdens.
The payoffs were beginning to show. Providence saw about $1 billion in operational improvements over the past couple of years. The system reported a net loss of $231 million in 2024, a marked improvement from the $596 million loss in 2023.
