Providence announces leaner executive team in new operating model

Providence Regional Medical Center in Everett, Washington

Photo: Courtesy Providence

Due to what it called unprecedented net operating losses, Providence, the not-for-profit Catholic health system serving seven states in the western U.S., is grouping its existing seven regional senior leadership teams into three divisional teams.

The new operating model calls for a leaner executive team, according to Providence, which did not specify the number of positions to be eliminated.

The move is being done due to external forces, Providence said. This includes the national shortage of healthcare personnel, inflation and global supply chain disruptions, which have strained patient care operations while also driving up the cost of care. Also, revenue and reimbursement from insurers has not kept pace, resulting in "unprecedented net operating losses for healthcare delivery systems nationally."

"As part of our vision of Health for a Better World, the Providence family of organizations has been working to create a more sustainable model of health care by 2025, one that makes safe, high-quality care accessible and affordable for everyone. We began this journey before the pandemic, but it has become even more imperative today as health systems across the country face a new reality," said Providence president and CEO Dr. Rod Hochman.

WHY THIS MATTERS

Providence reported a Q1 operating loss of $510 million, driven by the impacts of inflation, the labor shortage and global supply chain disruptions that created challenges on top of two years of the pandemic.

"With the pandemic, the last two years were challenging for many in healthcare," CFO Greg Hoffman said in a statement in May. "However, 2022 may be the biggest challenge yet."

Erik Wexler, who previously served as president of strategy and operations for Providence's southern regions, is stepping into a new role as chief operating officer for Providence, and overseeing the three new divisions of South, Central and North.

The health system is consolidating the leadership of three clinical lines of business – Physician Enterprise, Ambulatory Care Network and Clinical Institutes – under one executive leadership team, led by EVP Dr. David Kim.

Providence said it is beginning the process of interviewing and selecting other members of the divisional leadership teams. Meanwhile, administrative support departments will adapt their structure to support the leaner operating model. 

THE LARGER TREND

The health system continues to recruit for essential roles such as more permanent RNs. Last year, Providence announced a $220 million workforce investment designed to reward, retain and recruit caregivers and fill open positions. 

Providence is taking other steps, it said, including managing length of stay to improve access, reviewing its real estate holdings and leases, reducing discretionary spending, and diversifying revenue to support patient-care operations.

ON THE RECORD

"Having served the Western U.S. for more than 165 years, Providence has lived through other economic downturns, past pandemics and periods of political and social unrest. Now, it's up to us to write the next chapter. With the steps we are taking today, the Mission of Providence will continue to endure and will allow us to hit the ground running in the New Year, putting us well on our way to creating the health system of 2025," Hochman said. 

Twitter: @SusanJMorse
Email the writer: SMorse@himss.org