Providence lays off 134 across Oregon health system, more cuts possible

Providence Health & Services said Thursday that it has laid off 134 employees across Oregon, part of an effort to cut costs amid growing financial pressures in the health care industry.

The broader Providence system, headquartered in Renton, Washington, is taking similar restructuring steps across its operations in seven Western states. The Catholic not-for-profit health system said it has eliminated 600 full-time jobs across its 125,000-person workforce. Most of those are administrative or non-clinical positions, though some medical providers were also laid off.

Providence said the cuts are essential to navigating the “new reality of reduced reimbursement and higher costs.” Hospital leaders in Oregon said they’re working to help affected staff move into other open jobs within the organization.

“This is kind of the beginning of what will be a difficult year,” said Jennifer Burrows, chief executive of Providence Oregon, “but this is going to be work that we need to continue to do,”.

Burrows said the health system would likely cut more positions this year but hoped attrition and leaving positions vacant would prevent additional layoffs. She said Providence is consolidating services and relying on fewer team members to maintain operations but that no service lines have been eliminated.

“The reductions are widespread. … We’ve really worked to try to kind of optimize what we’re currently doing with less people,” she said.

Earlier this year, Providence CEO Erik Wexler announced that the health system would

freeze hiring for dozens of open jobs and initiate immediate cost-cutting measures

, including cutting back on travel and pausing community sponsorships.

The health system said it expects financial headwinds to continue through the year.

The financial challenges Providence is facing aren’t unique, but the health system’s leaders say they’re especially tough in Oregon because of state laws that dictate staffing levels, limit how fast costs can grow and restrict partnerships with large corporations and private-equity firms.

Burrows said Oregon had implemented a cost growth target prior to the pandemic that “didn’t have a tremendous amount of evidence behind it.” She said those targets limit how much hospitals can ask for reimbursement from Medicaid and commercial insurers, but are now out of step with economic realities.

“We’ve been operating at a loss,” Burrows said. “Our revenues are not keeping up with the cost of providing care.”

Money coming in from Medicaid and commercial insurers, she said, have stayed flat over the last five years.

Other hospital systems in Oregon are also weighing cost-cutting measures. Oregon Health & Science University is also