Providence Health & Services in Medford, Oregon, is facing financial challenges due to its payer mix, which consists of 60% Medicare and 20% Medicaid. These payers typically reimburse at lower rates compared to commercial health insurance. To address this, the organization is shifting towards risk-based contracts for financial sustainability.
The region also faces competition from the nearby Asante health system. The financial environment is further complicated by a modest 2.9% rate increase for Medicare in 2025, which falls short of keeping pace with inflation.
To enhance its financial viability, Providence Health & Services is focusing on coordinated care models that bridge acute and ambulatory services. They are also embracing risk-based contracts, particularly through the Medicare Shared Savings Program. This shift has improved the organization's financial outlook.
However, there have been challenges, such as financial setbacks from participation in the Primary Care Plus model and issues with patient access to primary care. Providence has mitigated these challenges by enhancing margins in perioperative services and implementing transition care management.
Data and collaboration are crucial in navigating risk-based care, and strong partnerships between hospitals and medical groups, as well as physician leadership, are important for driving cultural change.
The broader trend in healthcare is towards value-based care, and Providence St. Joseph Health is well-positioned to adapt to these changes. The organization remains committed to serving vulnerable populations while navigating the complexities of modern healthcare financing.