Providence announced Thursday that it is "exploring strategic options" for its health plan, including a possible sale.
The integrated health system said regional insurers like Providence Health Plan (PHP) are feeling the squeeze from rising costs and increasing technological demands. Given their smaller size, plans like PHP lack the scale of major national payers and are less nimble in adapting to industry challenges.
A plan of PHP's size, for example, isn't able to cushion cost pressures that it faces through other business lines. Regional plans also lack the resources to make critical technology investments, Providence said.
Providence said in the announcement that it has no details at present on potential partners or the timing of a sale and that it will offer additional information as plans become more concrete.
Providence Chief Financial Officer Greg Hoffman said in the announcement that the move falls within the health system's broader push to focus on high-quality care and the "long-term strength” of the organization.
A potential sale doesn't reflect the quality of PHP or the caregivers that work there, Hoffman said.
“We’re taking a thoughtful approach,” said Hoffman. “Throughout this process, we will keep our caregivers, members, clinicians, providers and employer partners at the center of our decisions.”
Providence has been sounding the alarm for a year about the financial headwinds it faces and has consolidated or spun off some of its departments as it looked to tighten the belt. It's also cut down leadership positions and announced multiple rounds of layoffs.
As the health system weighs a potential sale, the health plan will continue to operate as normal, Providence said, honoring existing contracts. The team is aiming to ensure that it maintains continuity of care for members as well as for providers and employer clients, according to the announcement.