Article
What Providence is planning
The Renton, Wash.-based system, with 51 hospitals, more than 1,100 clinics and more than 120,000 employees across seven states, told investors on Jan. 12 that it is reworking its delivery model under a $2 billion plan running to 2030. A spokesperson said Providence may not own every service in the future and could co-own some or transfer ownership of others. The plan’s levers include revenue growth, portfolio changes, efficiency in the top quartile and modernized technology. For 2026, the system wants positive operating margins, capital for growth and a stronger balance sheet.
The portfolio work is already under way. Providence sold its health IT consulting arm, Tegria, this month. It moved home health and hospice into a joint venture with Compassus in October, sold 10 skilled nursing facilities in March 2025 and sold its revenue cycle company, Acclara, in early 2024.
Where the turnaround stands
Providence returned to an operating profit in the third quarter of 2025, posting $21 million in operating income, a $229 million swing from a year earlier. Revenue rose 5% while expenses rose 3%, and contract labor spending fell by a third. Those gains followed hard choices: an executive restructuring, a nonclinical hiring freeze, layoffs and closures of some low-volume programs. CEO Erik Wexler has said he expects 2026 to be materially better than 2025, though he also flagged Medicaid cuts under last year’s federal budget law and the expiration of enhanced ACA tax credits as real risks.
Lessons for other boards
- Separate the mission from the asset. A system can keep a service available to patients without owning it. Joint ventures and transfers can protect access while freeing capital.
- Set access guardrails first. Wexler has said Providence will avoid creating health deserts and kept obstetrics in communities without alternatives. Boards should define those non-negotiables before reviewing divestitures.
- Look beyond hospitals. Post-acute, consulting and administrative businesses are often the easiest to sell or partner, and they can absorb management attention out of proportion to their margin.
- Pair cuts with growth. Providence’s plan pairs divestitures with revenue growth targets. Cost reduction alone rarely sustains a turnaround.
- Communicate early. Ownership changes affect staff, physicians and communities. Clear explanation reduces resistance and protects the system’s reputation.
Archive entry for Jan 18, 2026, added Nov. 11, 2026.