Providence Health & Services is laying off 128 employees across Oregon this week, the latest in a series of cuts as the state’s largest health system grapples with deep financial challenges and broader industry restructuring.
The layoffs affect a wide range of union-represented and nonunion workers, including nurses, clinical staff, researchers and administrative employees. It spans hospitals, clinics and other workplaces, according to Jennifer Burrows, chief executive of Providence Oregon.
“While we will make every effort to place these caregivers in other roles, we know that some will leave the organization,” Burrows said in a statement. “These difficult decisions affect our employees and the communities we serve. They reflect the fact that every health system is undergoing a fundamental restructuring due to widespread workforce and funding issues.”
This week’s layoffs follow an earlier round of cuts in June, when the not-for-profit Catholic health system shed 600 jobs across its seven-state network, including 134 in Oregon.
Burrows warned that more job reductions are likely in the coming months as the health system tries to get its finances back on track. She said the hospital chain has been hit by a perfect storm of challenges: skyrocketing labor and supply costs, new state rules that require more charity care and higher staffing levels and federal plans to cut Medicaid funding.
Hospital officials said the budget reconciliation bill recently passed by Congress would equate to nearly $100 million in annual losses in Medicaid funding for Providence Oregon next year. Providence said it also expects the new federal rules to increase the number of uninsured patients, which it says could strain the health landscape.
“In part, this means we will not be able to offer all services in all locations,” Burrows said. She said patients can expect to see some services consolidated in places “where we have high volume and high expertise.”
Providence did not specify which services will be reduced or where the changes will happen.
The Oregon Nurses Association said layoffs would worsen Providence’s worker shortages and compound what it characterized as unsafe conditions for both patients and providers.
“At a time when our healthcare system is under immense strain, Oregon needs bold investments in patient care—not more cuts,” the nurses labor union said in a statement.
The union also pushed back against Providence’s claim that labor costs are part of the reason for the cuts, pointing to the size of the health system’s overall budget and the high compensation of its top executives.
While the nurses association acknowledged the challenges posed by Medicaid underfunding and recent federal policy changes, it argued that Providence should prioritize retaining frontline workers.
The Renton, Washington-based health system has a major presence in Oregon. It employs around 25,000 people in Oregon and operates eight hospitals and more than 90 clinics across the state. Last year, the health system served around 1.25 million patients across the state. Its insurance subsidiaries — Providence Health Plan and Providence Health Assurance — provide coverage to roughly 500,000 through commercial, Medicaid and Medicare Advantage plans.
Financial filings show that Providence Oregon posted an operating loss of nearly $261 million in the first quarter of 2025. Part of the loss was attributed to a 46-day strike that began in mid-January, which required the health system to bring in expensive contract workers. The health system said new state laws mandating higher staffing levels, capping allowable cost growth and expanding access to free and reduced-cost care have also hit its bottom line.
To rein in spending, Providence has already implemented a number of cost-control measures. Earlier this year, Providence CEO Erik Wexler announced a system-wide hiring freeze and cut backs to employee travel and community sponsorships.
Providence said these financial challenges are likely to persist through the rest of the year — and possibly longer.
©2025 Advance Local Media LLC. Visit oregonlive.com. Distributed by Tribune Content Agency, LLC.
