Providence Pauses Nonclinical Hiring as CEO Expresses Concern for 'Perfect Storm'

Erik Wexler, the health system's new leader, told employees that steps are being taken to weather financial turmoil.

As it continues its steep climb out of the red to pursue financial sustainability, Providence is taking action to cut costs in several areas.

The Renton, Washington-based hospital operator is implementing a freeze on nonclinical hires, with president and CEO Erik Wexler telling employees in a memo that the organization is working to overcome challenges impacting the bottom line.

Those issues include low reimbursement rates from payers, elevated labor and supply costs, and fallout from last year's CrowdStrike outage and January's Los Angeles wildfires, according to Wexler.

"Over the last three months, the economic headwinds have shifted rapidly, forming a perfect storm that threatens our financial sustainability and, therefore, our ability to carry out our mission," he wrote. "We are being called to respond to the times to ensure the ministry thrives under a new reality of significantly reduced reimbursement and higher costs."

Along with pausing hiring for nonclinical positions, Providence is also restricting nonessential travel, filing lawsuits against insurers over payment delays and claims denials, and seeking out partnerships such as the joint venture with Compassus.

The moves are in addition to steps Providence has already taken to lower expenses, including ending major league sports sponsorships and spinning off its investment arm, Providence Ventures, to include other partners, Wexler highlighted.

Since taking over as CEO in January, Wexler has targeted leadership reorganization as well. Since the end of last year, 46 leadership roles were eliminated, Wexler said, while an Office of Transformation was formed to oversee technology solutions shortly after his appointment.

The changes were meant to build on the progress Providence has made in its effort to reach profitability. The system nearly halved its losses in 2024, finishing the year with an operating loss of $644 million, compared to $1.17 billion in 2023.

However, Wexler warned that 2025 is bringing its own set of roadblocks, like cuts to Medicare and Medicaid that have reduced Providence's funding by $500 million, with another $1 billion expected to be lost through additional potential cuts.

"[We] were making significant progress getting our costs in line with our revenue, and we were on track to finally break even this year," Wexler wrote. "But just as we were nearing that goal, the external economic conditions in 2025 took a sudden turn."

Providence isn't the only major health system that has turned to layoffs and hiring freezes to bring down costs. Mass General Brigham, for example, announced in February that it would conduct the largest layoffs in its history to close an anticipated budget gap of $250 million over the next two years.