Providence CEO Expects Stronger Financial Performance in 2026 After Turnaround Progress

According to Wexler, steps taken in 2025, including operational discipline, supply chain negotiations, and access optimization, are expected to yield larger financial benefits in 2026 as those changes fully annualize.

Providence Health System reported continued improvement in its financial performance in 2025, with President and CEO Erik Wexler stating that the organization expects further progress in 2026, following a year of operational restructuring and cost controls.

The Catholic health system reported a positive operating margin in the third quarter of 2025, generating $21 million in net operating income. The result represented a $229 million improvement compared to the same period last year. Wexler said the fourth quarter is also expected to remain in positive territory, positioning the system for a stronger financial year ahead.

“The third quarter was in the black. In the fourth quarter, we expect to be significantly in the black,” Wexler said. “And we believe that 2026 will be a materially better year than even 2025.”

Providence operates 51 hospitals and more than 1,000 clinics across the western United States. According to Wexler, steps taken in 2025, including operational discipline, supply chain negotiations, and access optimization, are expected to yield larger financial benefits in 2026 as those changes fully annualize.

At the same time, the system continues to face rising labor and supply costs, which Wexler described as part of a broader “poly-crisis” affecting health systems nationwide. Providence is also preparing for potential disruptions stemming from federal healthcare policy shifts, including the HR1 tax package passed last summer.

As part of its restructuring, Providence reduced thousands of full-time positions in 2025, including administrative roles, and eliminated duplicative services in markets where alternative providers were available. Wexler said these decisions followed extensive scenario planning tied to anticipated changes in Medicaid eligibility.

“HR1 is absolutely impacting our health system and all health systems across the country,” he said.

Providence has closed some labor and delivery programs where utilization was low, while maintaining maternity services in communities with limited alternatives, including Kodiak, Alaska; Polson, Montana; and Eureka, California.

The system is also monitoring the expiration of Affordable Care Act premium tax credits, which ended in December. Wexler said higher insurance premiums could result in coverage losses, leading to delayed care, increased uncompensated services, and additional financial strain on providers.

Looking ahead, Wexler said Providence’s priority is maintaining modest operating margins to ensure long-term sustainability as Medicaid changes take effect beginning in 2027. The system is also expanding the use of artificial intelligence tools to reduce administrative workloads and improve efficiency across clinical operations.

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