Nonprofit health system Providence, which operates three of Orange County’s six largest hospitals, has undergone a restructuring that includes promotions for two local executives.
Erik Wexler, who previously served as president of strategy and operations for Providence’s southern regions and is based out of Providence’s Irvine base, is stepping into a new role as chief operating officer.
Kevin Manemann, who previously oversaw hospitals in Orange and Los Angeles counties, is now in charge of all of Providence’s 17 hospitals in California, which employ 44,700 and generated $9.9 billion in revenue in 2021.
“We’re in unprecedented times,” Manemann told the Business Journal. “A lot of healthcare systems are going through tough times.
“This opportunity to streamline our operating model will allow us to free up resources for the front lines.”
Fast-Changing Times
The restructuring is a result of a “fast-changing healthcare landscape,” Renton, Wash.-based Providence said in a July 19 statement announcing the change.
Providence is a national, nonprofit Catholic health system comprising 52 hospitals, over 900 physician clinics and many other health and educational services. It employs nearly 120,000 caregivers serving communipties across seven western U.S. states.
“External forces—including the severe national shortage of healthcare personnel, inflation and global supply chain disruptions—have strained patient care operations throughout the U.S. while also driving up the cost of care,” Providence said.
“Meanwhile, revenue and reimbursement from insurers has not kept pace, resulting in unprecedented net operating losses for health care delivery systems nationally.”
Losses
The nonprofit hospital chain reported 2021 operating revenue of $27.3 billion, which was under operating expenses of $28 billion. It had a similar result in 2020 when operating revenue of $25.7 billion fell short of $26 billion in expenses.
The operating deficits were attributed to surges in COVID cases and a reduction in government reimbursements.
“Health systems across the country face a new reality,” Providence Chief Executive Rod Hochman said in the statement.
Providence is restructuring its existing seven operating regions into three new divisions.
Wexler will oversee these three new divisions, including the South, which is led by Manemann, who plans to continue operating out of the Irvine office.
“We will be bringing in a newly formed team and figure out how to effectively operate together,” he said.
The other two divisions include Central for Eastern Washington/Montana, Oregon and Texas/New Mexico; and North, Western Washington and Alaska.
In addition, the health system is consolidating the leadership of three clinical lines of business—Physician Enterprise, Ambulatory Care Network and Clinical Institutes—under one executive leadership team.
Nurse Push
Meanwhile, the health system is focusing on retention and recruitment of essential roles, continuing to add more permanent registered nurses each month.
Last September, Providence announced a $220 million workforce investment that included a $1,000 bonus “for all caregivers.” At that time, it had 17,000 job openings and the company promised referral bonuses from $1,000 to $7,500.
The reorganization will emphasize retaining nurses and technicians while reducing its administrative staff, Manemann said.
“From a front-line perspective—nurses and technicians—there will be no impact. We’re short in those areas already,” he said. “This really is administrative redesign.
“As we design this, we’re trying to push decision making to the person closest doing the work.”
Real Estate Review
Providence also said it’s reviewing its “real estate holdings and leases.”
“I don’t have my arms around details of that yet,” Manemann said. “Through the years of acquisitions, we have a lot of assets. We have to determine if it’s worth keeping those assets. I don’t think it will be a huge impact in Orange County.”
In Orange County, Providence operates three hospitals, which each reported revenue increase and pretax net income for the year ended Sept. 30.
These include:
• Providence St. Joseph Hospital in Orange, where revenue climbed 8% to $784.8 million and net income fell 6.8% to $88.7 million
• Providence St. Jude Medical Center in Fullerton, where revenue climbed 12% to $740.2 million and net income increased 12% to $132.4 million.
• Providence Mission Hospital in Mission Viejo, where revenue climbed 13% to $718.8 million and net income also rose 18% to $62.2 million.
