Providence announced it is cutting 600 mostly administrative jobs in a restructuring to adapt its operations for a new reality of reduced reimbursement and higher costs.
The affected roles are primarily in non-clinical, administrative functions, though some patient-care roles are also impacted, Providence said.
The not-for-profit health system based in Renton, Washington, began implementing the restructuring on Thursday to reduce 600 full-time-equivalent positions from its total 125,000-person workforce across seven states.
Where possible, affected individuals are being redeployed into other positions at Providence, which currently has more than 5,000 open roles, the health system said. Transitional resources are also being provided to those who are impacted.
"We do not take decisions like this lightly and recognize that behind every role is a person, colleague, friend and caregiver whose contributions have helped carry out our Mission," said Providence Chief Operating Officer Dr. Darryl Elmouchi. "These difficult but necessary steps are part of a comprehensive approach to financial sustainability that will enable our family of organizations to better reinvest in and revitalize the front lines of care, including the people, programs, equipment and facilities needed to serve our communities."
WHY THIS MATTERS
Providence said that, like other health systems, it is responding to multiple pressures facing healthcare, including proposed federal cuts to Medicare and Medicaid, ongoing denials and delayed payments from commercial insurers. It also has higher labor costs due to new staffing laws in some West Coast states, Providence said, along with higher costs for pharmaceuticals and supplies due to inflation and tariffs.
The health system's comprehensive approach to long-term sustainability includes minimizing variation and duplication, reducing discretionary spending and capturing revenue, it said.
THE LARGER TREND
For the first quarter 2025, Providence reported an operating loss of $244 million, a decline from a $176 million operating gain in the same period last year, according to its Q1 financial report.
For the three months ended March 31, 2025, compared with the three months ended March 31, 2024, Providence said it experienced higher patient volumes offset by increased operating expenses.
Also rate increases have declined, the health system said. Effective Oc. 1, 2024, and Jan. 1, 2025, the Centers for Medicare and Medicaid Services updated 2025 payment rates for hospital inpatient and outpatient services paid by Medicare.
"For fiscal year 2025, Providence's rate increases are significantly lower than increases experienced in fiscal year 2023 and 2024, driven by changes in hospital-specific wage index factors," it said in its financial statement.
Email the writer: SMorse@himss.org