Ambition is not a substitute for strategy.
Providence says its closure was due to declining enrollment. I disagree.
It’s about a weak strategy and ambitious goals that failed to deliver.
Back in 2017, the university made a big strategic bet. It changed its name, partnered with Providence St. Joseph Health, launched a School of Health Professions, and set ambitious enrollment targets.
Their goal was to hit 10,000 health professions students within a decade, plus 1,400 liberal arts students.
They also invested in a $25 million campus improvement plan backed by external funding. Nine years later, the university has only 630 students total.
Here are five strategic lessons I believe Christian colleges should take from this closure.
1. Setting ambitious growth targets is not a strategy.
Saying we’ll get 10,000 students sounds exciting, but why would those students choose Providence over their alternatives?
Sure, a new partnership can create access and new programs can create capacity. But neither guarantees demand.
Strategy requires making choices that give students a compelling reason to choose you.
2. A subsidy is not a substitute for a sustainable business model.
Providence Health was providing roughly $8 million annually to support the university. When that funding was slated to end, the underlying economics didn’t make sense.
In FY2025, Providence reported $28.6 million in revenue against $35.6 million in expenses. The subsidy concealed their revenue problems.
3. Capital investments cannot compensate for weak demand.
Providence invested big time in campus improvements while enrollment floundered. New buildings are not a substitute for creating student demand.
Build demand before you build capacity.
4. Small scale makes complexity expensive.
Providence currently has 630 students, including just 397 on campus, while supporting multiple academic programs, 15 athletic teams, and 244 employees. That’s a lot of operational complexity for a relatively small enrollment base.
Strategy is about tradeoffs. Colleges must be willing to make hard choices about what they do, what they stop doing, and where they can realistically win.
5. By the time you need a merger to survive, it may be too late.
Providence reduced expenses, restructured programs, cut staff, and explored mergers and acquisitions. Having been involved in M&A on the acquisition side, it’s clear to me that potential partners saw the same financial challenges.
A merger isn’t a substitute for a viable strategy. And desperation rarely improves your negotiating position.
Providence’s closure is heartbreaking for the students, faculty, staff, and community it has served for nearly 95 years.
But ambition is not a substitute for strategy.
If you need help with your strategy, let’s talk.