Since taking on the role of CEO in January 2025, Erik Wexler has openly addressed Providence’s headwinds by taking several decisive actions to ensure financial sustainability: placing a freeze on nonclinical hiring, laying off about 4% of Portland, Ore.-based Providence Health Plan’s workforce, and reorganizing top-level leadership.
Providence, a 51-hospital system based in Renton, Wash., has also redeployed digital initiatives to a new office of transformation.
Providence outlined other initiatives in an April message to employees. In addition to the pause on nonclinical hiring, the system restricted nonessential travel, such as for conferences.
Mr. Wexler told Becker’s all of these actions are part of broader efforts to advance the organization forward. He discusses the steps in more detail below.
Editor’s note: Responses have been lightly edited for clarity and length.
Question: You’ve described the current financial landscape as a “polycrisis” and “perfect storm.” What frameworks or principles are guiding your decision-making in such a high-pressure environment — and how are you balancing near-term solvency with long-term mission and reinvestment goals?
Erik Wexler: When we speak about polycrisis, it really is a perfect storm — with labor issues and a shortage that continues to be significant in healthcare. You’ve got inflation and potential tariffs. Of course, the commercial payers continue to slow pay, down code and deny to providers. And now what looks to be a very material impact from government programs like Medicaid are going to change the way healthcare is delivered in the United States, and we are concerned it won’t be for the better — that there will be a reduction in programs and services so that hospitals and providers can survive the storm. And that ultimately, access will be decreased rather than increased. So that has maybe short-term gain financially and has long-term pain from a health status perspective in this country.
Q: Providence has reorganized several leadership functions and paused nonclinical hiring to address cost pressures. What have been the early lessons from this restructuring in terms of speed, agility or cultural impact across the system?
EW: When we reorganized almost three years ago from seven regions to three divisions, we did find that there were savings for the cost of leadership that allowed us to keep more resources closer to where care is delivered. The outcome of it was even greater for us, in that we were able to be more fluid in our decision-making and in trying to standardize practices across the organization. In other words, I call it deploying best practices versus what we commonly hear, sharing best practices. And so, instead of trying to get seven different leaders together that were in charge of those geographies, there are three chief executives for those divisions. They work very closely with our COO and our shared services, and we can very quickly move to do the right thing for our organization and for the communities that we serve.
After I was appointed CEO, I took the time to have dialogue and engagement tours. I visited with almost 5,000 people across our seven geographies, and I asked them, what are you hoping for in the future? What would you like to see change? And we’ve used that input to create priorities for us that we believe will be impactful to our organization going forward.
One of the changes that I made post-Jan. 1 was even organizing my own direct report team. It was quite excellent in the past — but given the times and also some of the expertise we need going forward, some of those changes have been very helpful in advancing our organization and reducing overhead.
Q: Providence Health Plan has laid off 4% of its workforce amid financial headwinds. How are you navigating the dual role of provider and payer in this climate, especially with respect to Medicaid policy changes and maintaining coverage access for vulnerable populations?
EW: I’ve been outwardly curious about how the commercial payers can do a better job of being accountable to reimbursing us through the commitments that they have made in our contracts, and I have held our own health plan to the same standard. Because if I’m going to be public about what I expect of others in that space, I expect the same or better of us.
And Providence Health Plan’s reduction of 4% was intentional — to try to bring the cost down of the premium end of what we do — so that we are not increasing insurance costs for our members. We believe that there are opportunities for more provider health plans to come together and align in a way that can create additional scale. And so, as time marches on, I think that Providence and other providers are going to be looking at those opportunities. And it could be not just with provider health plans, but also with the commercial health plans.
Alignment is much better than the ongoing arms race that we are feeling between the providers and the payers at this point.
Q: One of the more unique moves you’ve made is spinning off Providence Ventures and scaling back on digital innovation investments. Can you talk about how you’re redefining the role of innovation in Providence’s future strategy — and what staying “transformational” looks like when under financial constraint?
EW: Over the past decade, resources have thinned at the provider level, causing us to look more inward about how we need to support the core of what we do — which is delivering care to the poor and the vulnerable. And there was a time early on where there wasn’t a lot of innovation from the digital side of things in healthcare. This is a decade or more ago. And so our organization stepped up and started to create some of those innovations that not only help Providence, but help a lot of organizations outside of Providence.
That’s a considerable investment. Fortunately, interest has grown substantially across the technology space to do that innovation. And all kinds of wonderful products and services are popping up that we don’t even have the resources, the people or the time to keep up with, given what’s happening in that area of specialty in the United States. It’s really fantastic.
So we took a step back, and we said, with all that innovation out there, rather than creating, maybe we’re in a better position to be focused and disciplined in buying those products and services. That has also caused us to take a look at what we do from a digital perspective at Providence that can help our caregivers and our physicians. And we believe that removing administrative burden is an absolute imperative — so that they have more time to spend with their patients, with each other as colleagues, but frankly, also with their loved ones.
So there’s a pretty intense focus on removing administrative burden going forward that will cause us to deploy the right type of digital advancement in the hopes of making a considerable difference. I sometimes refer to it as the digital renaissance that we are beginning to feel in healthcare.
