Providence Everett to end hospitalist contract with Optum after 20 years

Published 3:18 pm Friday, February 6, 2026

EVERETT — Providence Regional Medical Center Everett will end its agreement with Optum for hospitalist services in July, a Providence spokesperson confirmed Thursday.

Sixty-five hospitalists are employed through the contract, which has been in place for nearly 20 years and will end July 29. Hospitalists — which include physicians, nurse practitioners and physician assistants — see patients when they’re admitted to the hospital and oversee care throughout a patient’s stay.

Providence representatives said they hope to retain the employees through another, lower-cost provider. Some hospitalists worry a new provider will jeopardize the quality of patient care and the local culture of the hospitalist team.

Providence Swedish North Puget Sound spokesperson Erika Hermanson cited financial challenges as the reason for terminating the contract.

“Despite months of good‑faith efforts, we were unable to reach a financially viable path forward with Optum,” Providence spokesperson Erika Hermanson said in a statement to The Daily Herald on Thursday. “Like many hospitals across the country, PRMCE is facing difficult financial headwinds that require us to make responsible, sustainable choices to protect patient care into the future.”

Optum representatives did not immediately respond to a request for comment.

Hospitalists were first informed of the change early this week, according to one hospitalist who spoke under the condition of anonymity for fear of retribution. On Thursday, hospital leadership held a meeting with hospitalists to explain why they’re ending the contract and to answer questions, according to a recording of the meeting obtained by The Daily Herald.

Since the COVID-19 pandemic, Providence Regional Medical Center Everett has lost close to $500 million, including $100 million last year, said Kristy Carrington, CEO of Providence Swedish North Puget Sound, at the meeting. Providence has cited changes to reimbursement structures, a national labor shortage, inflation and delayed insurance payments as reasons for its budget challenges. Next year, Medicaid reimbursement reductions and Affordable Care Act rollbacks will likely further exacerbate the hospital’s budget woes, Carrington said.

“This decision is based solely on the unsustainable cost structure of the current agreement and does not reflect the outstanding clinical care provided by our hospitalist physicians and advanced practice providers,” Hermanson said in the statement.

Last year, the hospital laid off more than 100 certified nursing assistants, also citing budget challenges.

Providence Regional Medical Center Everett will solicit proposals for new contracts from other hospitalist management groups, Hermanson said. Leadership will accept proposals for 30 to 60 days, said Dr. Sanjiv Tewari, chief medical officer of Providence Swedish North Puget Sound, at the meeting. In an email to hospital staff obtained by The Daily Herald, Providence leadership said Optum has been invited to participate in the proposal process.

Many of the specifics of a new contract — such as the number of employees retained, salary, benefits and patient loads — will not be certain until hospital leadership chooses a vendor. Some hospitalists raised concerns about these specifics during the meeting. Some have discussed leaving due to the uncertainty, the anonymous hospitalist said.

Tewari said he expects a new provider to retain all the employees and to maintain the current patient load. Leadership hopes to decide on a provider within 90 days, he said.

In the email, leadership said a new contract would provide “the same or enhanced coverage” for patients.

“We are hoping that nobody — no clinician, physician or PA — leaves the organization,” Tewari said. “We want you all to stay, and if that happens, we won’t have any interruption.”

The contract with Optum was set to expire in January 2027, hospitalists said at the meeting. Some hospitalists questioned why leadership decided to end the contract six months early instead of letting it expire.

“I personally believe that the faster we can do this, the better it is for everybody,” Tewari said in response. “I think that once you see some of these companies come in and do their presentations and talk about what they can offer all of you, I think people will be much more settled, and this is why I’d like to do it faster rather than slower. If you drag this thing out over a year, as an example, you don’t gain any benefit whatsoever. It just adds more stress, more anxiety.”

A new contract could lead to reduced costs through lower management fees and technological advancements, including advanced data analytics, Hermanson said in an email Friday. Technological advancements would lower costs “by making the practice of medicine easier and more efficient for clinicians, and through the continuous evaluation of resources and where they should be allocated within the hospital,” she said.

Hospitalists are in charge of the hospital’s residency program with Washington State University. Hermanson said leadership does not expect any reductions to the residency program.

“In fact, we anticipate this change will strengthen the WSU residency program as hospitalist service providers typically want to train physicians who can then enter the workforce,” she said.

Most of the hospitalists at Providence Regional Medical Center Everett grew up in the area, and the team is “woven into the fabric of Everett,” the anonymous hospitalist said.

Jenna Peterson: 425-339-3486; jenna.peterson@heraldnet.com; X: @jennarpetersonn.