Providence, a 51-hospital system, ended the first six months of this year with an operating loss, according to financial documents released Aug. 15.
For the six months ended June 30, the health system reported revenue of $12.7 billion, up 2 percent year over year on a pro forma basis. The pro forma results exclude the operations of Newport Beach, Calif.-based Hoag Hospital. Providence and Hoag ended their affiliation in January.
Providence’s expenses also increased. For the six months ended June 30, the health system reported operating expenses of $13.6 billion, up 8 percent year over year on a pro forma basis. Higher wages, increased agency staffing costs and overtime pushed Providence’s labor costs higher year over year, the system said in an earnings release.
Providence ended the first two quarters of this year with an operating loss of $934 million, compared to an operating loss of $94 million in the same period a year earlier. The system’s second-quarter operating loss totaled $424 million.
Providence, which has system offices in Renton, Wash., and Irvine, Calif., released its financial results a month after announcing a plan to shrink its leadership team and roll out a new divisional structure.
“Creating a more sustainable model of health care by 2025 has been a key part of our vision since before the pandemic,” Providence CFO Greg Hoffman said in the earnings release. “But it has become even more imperative today as health systems across the country face a new reality. Alongside our investments to simplify processes and modernize technology, streamlining our leadership and administrative structure is another way we will ensure we are operating as efficiently as possible, so that we can keep resources focused on direct patient care, especially for those who are most vulnerable.”
For the six months ended June 30, Providence invested $1 billion in community benefit, compared to $813 million in the same period of 2021, according to the earnings release.
“Having served the Western U.S. for more than 165 years, Providence has lived through other economic downturns, past pandemics, and periods of political and social unrest. With the steps we are taking to respond to the times, we will continue supporting caregivers and serving our communities throughout these challenging times, with the mission of Providence enduring for generations to come,” Providence President and CEO Rod Hochman, MD, said in the earnings release.