RESO Core Leaders –
Those of you at an executive director level or above level will have received the message below from Dr. Hochman this morning, outlining our situation and some of the steps our system is taking to reduce our severe operating losses. If you haven’t seen it, please read his message below.
For the second or third time in the last couple of years, healthcare systems are facing daunting challenges where we have little control over the root causes. When the pandemic began, we weren’t sure how we were going to manage through a projected wave of patients that we didn’t have the capacity to serve. However, we came together, worked really hard, got creative and by the summer of 2020, we were an effective team supporting the care delivered by Providence.
Then, we faced the surges of COVID and most recently the variant that has really impacted staffing. Through everything that’s challenged us, we’ve maintained our focus on the Mission and worked together to sustain the ministries of Providence. It’s remarkable and I’m so grateful to be part of this team.
Now, we face financial pressure that’s historic. The traditional belt-tightening will not solve this challenge and, again, we need to be creative and work hard and rally as a team to solve some big challenges. To that end, we are pausing projects as Dr. Hochman outlines below. We are not pausing critical infrastructure, life safety projects, Foundation-funded projects or projects that are so close to completion that it doesn’t make sense to pause them. We are pausing new projects, including the design work that creates operational expense, so that we can weather this storm and be prepared to move forward when the economy and operations stabilize.
The next few months are going to be challenging. My ask is that you stay positive – as a leader your attitude and confidence will set the tone for your teams and mitigate the natural tendency people have to focus on the negative. We’re going to get through this and we will come out of it stronger and better than we are today. If you need to vent, and at some point you will, I ask that you “vent up.” By that, I mean don’t complain to anyone whose position is below yours on the org chart. If someone on your team is discouraged, your job is to provide a safe space to talk and support them.
As you communicate with your teams, please remember:
• The situation we are in is not unique to Providence. Every healthcare system in the country is in a similar position and working on the same issues we are.
• We are committed to the Mission and the work we do is critical to the success of Providence.
• Our culture is something to be proud of and will sustain us as we work together to solve these challenges
• We appreciate everyone on our teams. As leaders, we must be sure they know it and that we support them.
• The pause will end and, when it does we will be ready to continue implementing the capital plans to support the future success of Providence.
I know this places a lot of focus and stress on our RESO team. I also know we’ll get through this together and drive solutions that allow us to achieve our financial targets and restart capital investments across the system. Our response to these challenges we face will define Providence and RESO in the future and I look forward to taking this journey with you.
Thank you for your professionalism, dedication and commitment to the success of Providence.
Mike Denney, VP, Puget Sound RESO on behalf of the RESO executive leadership team
Dear senior leader,
As the first half of 2022 comes to a close, I remain profoundly grateful for your ongoing commitment to the Mission. Thank you also for rolling up your sleeves in response to the financial crisis facing health systems across the country.
With reimbursement from insurers and other revenue not keeping up with rising costs, health systems nationally have posted staggering operating losses. The pressure of labor shortages, inflation and global supply chain disruptions continues to affect us all.
As we shared previously, our net operating losses for the first quarter came to $510 million. We had hoped to begin turning the tide by now, but it is clear these challenges have persisted into the second quarter.
The situation calls us to rally even more intently around our core operations of serving patients. That means focusing our precious resources on services that deliver or support direct patient care, as well as generating new revenue to help fund our patient care Mission.
Progress on our path to recovery
Thank you for your ongoing focus on caregiver retention and recruitment, which remains paramount to meeting the needs of patients amid the severe national shortage of health care personnel. Similarly, the incredible team effort to manage length of stay and improve access to our clinics and outpatient centers continues to be essential for ensuring patients can get the care they need.
Here are some steps we’re taking to be good stewards and respond to the times:
1. Pausing new construction not related to life/safety or compliance. The price of concrete and steel, fuel costs and labor have created unprecedented inflation in the construction market. Projects where construction has not started or are still in the design phase will be paused until economic conditions are more favorable. This is a pause, not an end, to our investments. We will reschedule the start dates when market conditions improve.
2. Continuing our comprehensive review of our administrative leases and real estate holdings. This includes our system office in Renton, Wash. Previously, we announced plans to lease our two office buildings to implement our new flexible model at Valley Office Park. Since then, we have received buyer interest in the entire Renton campus. We are considering the possibility of selling, which can help support our commitment to creating a modern, flexible work environment for caregivers. If we decide to sell, we would negotiate a multi-year lease back to give us ample time to find a new home for our Washington-based system office. Our new on-site clinic would remain. We will keep you apprised if we decide to move forward with this option.
3. A strict moratorium on travel. Practicing stewardship requires each of us to refrain from unnecessary business travel and continue to take advantage of virtual options for meetings and education. Any new essential travel must be approved by a vice president or above for your division.Rod Hochman, M.D.
Our family of organizations is entrusted with an incredible centuries-old legacy of service. Though these are challenging times, the Mission will continue to be our north star, with our heritage serving as a continuous reminder that by leading with love, anything is possible.
Thank you again for responding to the call to serve and for delivering our Promise to our patients and one another. I remain inspired and humbled by each of you.
President and CEO