With 51 hospitals across seven states, Renton, Wash.-based Providence serves patients in large urban and suburban markets as well as some of the most remote communities in the country, including the cities of Seward and Valdez in Alaska. For Erik Wexler, the system’s president and CEO, that range of communities is central to decisions about which services each hospital should offer.
“One of the things we focus on is to make every single attempt to avoid creating a healthcare desert,” Mr. Wexler told Becker’s.
Providence generally evaluates services that are duplicated across nearby facilities or have low utilization, he said. Those programs then move into what Providence calls ethical discernment, a process tied to its identity as a Catholic health system. The process incorporates stakeholder perspectives and weighs the advantages and disadvantages of closing, merging or expanding a program before a recommendation is made.
Mr. Wexler pointed to Providence Seaside (Ore.) Hospital as an example. The hospital used the discernment process to evaluate its labor and delivery program, which he described as outstanding but handling only a few deliveries each week. He said the program also required dedicated nurses and other staff who were needed elsewhere. The hospital closed inpatient obstetric and newborn care in October 2025, citing declining delivery volumes and shortages of physicians and nurses trained in maternity care.
“When we went through this ethical discernment process, it was clear that there was a hospital not too far away that isn’t a Providence hospital but is a wonderful hospital with a great labor and delivery program,” Mr. Wexler said. “If they were willing, we could close our program, and they could take on our patients. Of course, they were excited to do that. We still have emergency care for labor and delivery in our emergency department.
“At the same time we closed that program, we found a need to create a trauma program at that very same hospital,” he said. “So we opened a level 4 trauma program, and through the end of June, halfway through this year, we had already taken care of 150 people whose lives have been saved.”
Mr. Wexler estimated that the number of people whose lives the program has saved could exceed 300 by year’s end.
“What this amounts to is responding to the signs of the times,” he said. “While we may close programs and put them in the thriving hands of others, we are also expanding in ways that allow us to take care of the community where it is desperately needed.”
Providence is making these service line decisions amid broader financial pressures, including rising costs, commercial payer denials, payment downgrades and the anticipated effects of HR 1. Mr. Wexler said he does not expect Providence to close programs solely because of financial concerns, crediting early preparation for HR 1 and the system’s turnaround. However, he expects 2027 to be harder than 2026.
His concerns extend to rural hospitals and other financially unstable institutions.
“What we should be concerned about in the United States is especially rural hospitals, or institutions that are already showing a lack of financial stability,” he said. “They’re likely to close programs because of the financial aspects alone. That is going to create access problems, and all of us in the United States should be worried about that, because when access is limited in rural communities or elsewhere, those patients need to go to other places, and then it becomes an access issue for those who are used to getting the care they need when it is central.”
Mr. Wexler has taken concerns about rural healthcare access to Capitol Hill. He said hospital profitability varies by geography, with reimbursement and operating costs contributing to stronger financial performance in some states and greater challenges in the Pacific Northwest and parts of the East Coast. Providence also faces reimbursement pressures because of its payer mix.
“We’ve always been focused on those who are poor and vulnerable, so our Medicaid payer mix tends to be higher than average, and we are especially challenged with offsetting a very, very low reimbursement rate, far lower than the cost of providing care,” he said.
For CEOs and CFOs weighing service line changes and other financial decisions, Mr. Wexler recommends focusing on a smaller number of significant adjustments rather than pursuing numerous smaller changes.
“One piece of advice I give to my own team and to others is to be focused and disciplined,” Mr. Wexler said. “Try not to boil the ocean. Go for the adjustments that are probably going to be the most courageous, rather than all the small opportunities in the organization, which can create a lot of distraction and even feel demoralizing.”
He said focusing on the largest opportunities can help organizations stabilize their finances more quickly, an approach Providence has applied to its broader business portfolio. Providence once had 36 support, service and subsidiary organizations, said Mr. Wexler, who served as COO for years before becoming CEO.
“What we realized is we couldn’t be a conglomerate anymore,” he said. “We needed to be a diversified healthcare organization with subsidiaries that support the core.
“Diversification can be wonderful in many ways, but it shouldn’t be so diversified that it takes your eye off the ball of the mission of the organization.”
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