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What Providence is doing
The Renton, Wash.-based system, with 51 hospitals and about 120,000 employees across seven states, is reworking its delivery model under a strategy that runs to 2030. The four pillars are revenue growth, portfolio transformation, top-quartile efficiency and technology modernization. A spokesperson told Becker’s the system “may not own every service going forward,” with some lines co-owned or moved to organizations better positioned to grow them.
The portfolio work is already well under way. Over the past two years Providence sold revenue cycle company Acclara to R1, sold 10 skilled nursing facilities to The Ensign Group, moved home health and hospice into a joint venture with Compassus and, earlier this month, sold its Tegria consulting arm to Altaris. It has also cut thousands of positions, including administrative roles, and closed some low-volume labor and delivery units where other local providers offer maternity care.
Early signs it is working
The financial trend has turned. Providence reported $21 million in third-quarter 2025 operating income, a 0.3% margin, compared with a $208 million loss a year earlier. CEO Erik Wexler said he expects the fourth quarter to be well in the black and 2026 to be materially better than 2025. He has also stressed that the system intends to preserve services in rural communities such as Kodiak, Alaska, rather than create gaps in access.
The governance questions for other systems
Providence’s scale is unusual, but the questions it is working through apply to most systems facing expired marketplace subsidies and Medicaid changes that phase in from 2027:
- Is ownership the right model for each service? Post-acute care, revenue cycle, consulting and lab are increasingly delivered through joint ventures or vendors. Boards should review each non-core line on whether owning it improves cost, quality or access.
- What are the access guardrails? Before any closure or transfer, define which services must remain available locally and how that will be measured.
- Who absorbs the people risk? Transfers and joint ventures move employees, culture and contracts. Workforce terms deserve the same scrutiny as price.
- How will proceeds be used? Divestiture cash is one-time. Tie it to balance sheet repair or specific growth investments rather than operating gaps.
Selling or sharing ownership can look like retreat. Providence is betting that a narrower, better-run core will serve its communities longer than a broad portfolio that keeps losing money.
Archive entry for Jan 25, 2026, added Nov. 11, 2026.