Providence Financials Strong, Hiring Freeze Continues

June 5, 2009 -- Despite the economic turndown, Providence’s financial position is extremely strong, evidenced by a memo sent to its employees recently by Russ Danielson, chief executive, and Terry Smith, chief operating officer, obtained by The Lund Report.

 

“Our year-to-date income in Oregon is strong,” they wrote. In particular, the year-to-date net operating income has exceeded budgetary projections by about $25 million.

 

“While this seems like a lot, we have to understand it's on an overall budget of $3.8 billion, and we've lost $34 million in investment earnings since the first of the year,” according to the memo.

 

Charity care is on the rise -- about 20 percent higher than 2008 – while Providence’s hospital in Seaside, saw its charity care numbers increase by 88 percent.
 

Overall hospital admissions have fallen by nearly 3 percent from last year, “a trend being seen throughout the state. For us, part of this is the Kaiser volume moving out of Providence St. Vincent; part is due to the economy,” according to the executives.

Membership in Providence’s health plan is also down by about 14,000 members – from a projected total of 284,000.

 

 

Providence’s work force is about 400 jobs below budget for the year. With a freeze on hiring, its executives aren’t planning to fill those positions – even if the economy improves.

 

“We’ve been very successful, and have avoided the general layoffs that have occurred in other Providence ministries, though it is important to know that we will continue to make routine business decisions that may affect some positions,” according to the memo. “In Oregon, we want to reorganize the work we do and capture those savings by baking them into our everyday work processes so that we can pass those savings back to our customers, patients and members. Everything we hear about health reform nationally and at the state level cites cost containment and cost reduction as central pillars.”
 

“We can't predict what will happen with the economy --- a year ago we never anticipated being where we are today,” they continued. “Yet we can plan for the future, much like you plan for your budget at home. One of the key things we're doing is ensuring we have 150 days of operating cash on hand (right now we have 142 days). Think of it as being similar to the five to six months of accessible savings that financial advisors recommend people have. That way, if the economy continues on its rocky road ----or gets worse ---- our organization will remain stable.”