Our Financial Health

A message from Kevin Manemann, chief executive, Southern California:
March 1, 2022

The pandemic has taken its toll on our community, providers and caregivers. Thankfully, our COVID-19 census is steadily decreasing, enabling us to prepare for a post-omicron/endemic phase, which is focused on recovering financially and renewing our long-term plans to transform health care delivery.

We anticipate the first half of the year will be one of the most challenging periods for Providence. We’ve seen an increase in health care costs in the past year due to several factors including inflation, which limits our purchasing power, and the disruption in the supply chain. For example, as a system, our pharmaceutical and medical supply costs are up 13%. Our labor costs are up 10%. Yet, we’ve seen less than a 2% increase in reimbursement for the care we provide. Unlike other industries, we don’t have the ability to pass on increases to customers when inflation strikes and there’s no prediction as to when things will stabilize.

As a system, we are reducing travel and other discretionary spending, pausing on hiring for non-essential positions and prioritizing new capital. There are no layoffs planned at this point. In addition, each ministry is developing a path forward based on their unique needs. And each medical group is making its own plans, geared toward their practice.

Our providers are key to our recovery efforts. We need your help in encouraging patients to not delay routine screenings and exams.

To support our providers, we are working on improving online navigation, so patients can schedule appointments online with primary and specialty care providers in order to take pressure off your staff. And we’re working on building out Epic to be more efficient. We appreciate you making every effort to maximize your schedules to accommodate as many patients as possible who need the care. 

Despite the challenges we faced for the past two years, our region continued to be recognized nationally for quality patient care and outcomes. We also expanded our outreach to ease racial disparities and improve access to health care. Many of these programs are being led by our physicians.

We appreciate any cost savings ideas you may have. Feel free to email your ideas to clinicalconnections@providence.org.

Thank you for all you do for our patients and our community. I appreciate each of you and am thankful for your dedication to our Mission.