Providence Health Returns to Profit in Q3 Amid Ongoing Sector Challenges

This reflects a $42 million improvement compared to the prior quarter and a $229 million increase from the same period in 2024.

Providence Health & Services, the 51-hospital nonprofit system, reported a return to operating profitability in the third quarter, marking a milestone in its ongoing multiyear turnaround.

For the three months ended September 30, Providence posted a $21 million operating income, representing a 0.3% operating margin.

This reflects a $42 million improvement compared to the prior quarter and a $229 million increase from the same period in 2024.

“When we started the year, we intentionally set out to reach a breakeven financial sustainability goal,” said President and CEO Erik Wexler. “It has taken a tremendous amount of hard work and decisive action from everyone across Providence St. Joseph Health, and that effort is starting to make a real difference.”

Operating revenues rose about 6% year over year to $8 billion, excluding contributions from recent divestitures and deals. Providence attributed this increase to higher patient volumes and improved pay rates. Case mix-adjusted admissions increased 4%, inpatient admissions rose 5%, acute adjusted admissions grew 5%, and total outpatient visits were up 2%.

Expenses rose 3% over the same period, with the system noting that volume-related spending was partially offset by a 33% reduction in contract labor costs and other expense management measures. Supply spending increased 8%, including a 12% rise in pharmaceutical expenses. The organization also launched a restructuring effort, targeting a reduction of 600 full-time equivalent positions, primarily in administrative and nonclinical roles. Earlier cost-control steps included paused hiring, departmental consolidations, and trimming discretionary spending.

Despite the quarterly improvement, Providence’s year-to-date performance still lags behind 2024. Nine-month operating losses totaled $244 million, compared with $155 million in 2024, while lower nonoperating gains from reduced investment returns left the system with an $83 million bottom line, down from $310 million a year prior. Excluding one-time gains from divestitures and partnerships, Providence’s year-to-date operating loss was reduced by $172 million.

“Thanks to the dedication of our caregivers and a commitment to focus and discipline, we are seeing meaningful improvements in our performance,” said Chief Financial Officer Greg Hoffman. “At the same time, the passage of H.R.1 and other external pressures continue to challenge the entire healthcare sector. These headwinds reinforce the urgency of our transformation and our commitment to adapt, so we can sustain our Mission and ensure continued access to high-quality care in the communities we serve.”

Providence’s quarterly progress mirrors trends across other large nonprofit health systems. Ascension reported a -1.4% operating margin, up from -3% the prior year, while Kaiser Permanente improved from a -2.1% operating margin to 0.7%.

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