Providence CEO sees more progress in 2026

After some challenging years, the Providence health system has made substantial progress in its financial turnaround.

In the third quarter of 2025, the system reported a positive operating margin, with $21 million in net operating income, an improvement of $229 million over the previous year.

Erik Wexler, president and CEO of Providence, tells Chief Healthcare Executive that the health system has made tough choices and is now starting to see some of the benefits. He pointed to the system’s focus and discipline over the past year in improving operations and providing the best care possible.

“To see that kind of progress is an extraordinary credit to our caregivers, our physicians and others out in the field,” Wexler says.

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

Wexler says many of the steps undertaken in 2025 will open up more access for patients and foster improved revenue, as well as negotiating more effectively for supplies and equipment. Providence operates 51 hospitals and more than 1,000 clinics in the western United States.

“All of that activity in 2025 annualizes into 2026, so whatever improvement we had in 2025 will be bigger in 2026,” he says.

At the same time, Providence continues to face what Wexler calls a “poly-crisis,” with higher costs for labor and supplies. Providence and all other health systems are also dealing with changes in the federal government’s approach to healthcare under the Trump administration.

Cutting duplicative services

Providence has reduced thousands of full-time positions across the health system over the past year, and that includes cutting some administrative positions. The health system has also made decisions to close some programs in areas where other providers have had similar services available.

“We've been very thoughtful about it,” Wexler says.

Like many other health systems across the nation, Providence is bracing for the prospect of cuts to Medicaid programs and many losing coverage, due to the HR1 tax package passed last summer. Most of the significant changes won’t begin until 2027, but some health systems have reexamined their programs and services and laid off staff.

With Medicaid cuts coming, Providence scaled back some services, including labor and delivery programs.

“HR 1 is absolutely impacting our health system and all health systems across the country,” Wexler says.

“When we knew back in January, almost a year ago, that Congress might be looking at something very, very impactful, we started doing scenario planning,” he continues. “And a lot of that scenario planning, which we have now implemented, was to remove duplicative services across our footprint, so we have had the closure of labor and delivery programs where utilization was low.”

Providence has closed labor and delivery services, but Wexler says the system has done so in areas where another hospital or health system is offering maternity wards.

Wexler says the health system will preserve labor and delivery services in areas where there are no other options available for communities.

“We've committed ourselves to not creating health deserts,” Wexler says.

“In Kodiak, Alaska, we're not going to close our OB program because it's essential to that community. The same thing in Paulson, Montana, or in Eureka, California, because the absence of those programs would be horrific for those communities,” he says.

But Wexler says much of the changes at Providence are coming as a result of the HR 1 legislation. As states tighten Medicaid eligibility and some lose coverage, Wexler says the goal is to be prepared in 2027.

He says he hopes to see at least modest operating margins “so that we have sustainability going forward.”

Affordable Care Act coverage

Wexler says he’s concerned about the lapse of tax credits for the Affordable Care Act. Those subsidies expired at the end of December, and while some lawmakers are pushing for their restoration, it’s not a lock that there’s enough support in Congress to reinstate the tax credits.

Health systems have said that millions could end up going without insurance because they can’t afford the higher premiums.

“I'm worried about patients,” Wexler says. “We're certainly worried about providers in the United States and the impact, but I'm especially worried about patients, because when they see how much those rates are going to go up, they may not renew their insurance.”

“And so if they go without insurance, a couple of things happen. One is they don't get well-being care. They don't get preventative care. Because they're so fearful of having to pay for the cost of that care on their own, they wind up getting sicker, and then they end up in the hospital or in an ICU or in an operating room, when more prevention could have stopped the disease from progressing,” he says.

Health systems will end up seeing more patients with no ability to pay and providing more charity care, and that will pose added financial pressures, he adds.

Faith and optimism

Even in a difficult landscape for health systems, Wexler says he’s optimistic about the year ahead.

“I think that this organization, our caregivers, physicians and leaders have worked so hard in 2025 to revitalize our institution that we're going to see the fruits of that extraordinary work come to life in 2026,” he says.

Wexler plans on touring the health system in the coming year and having more conversations with staff at Providence facilities, just as he did last year.

He says he wants to “make sure I have my fingers on the pulse of what we are doing and what we need to do in the future.”

Wexler says he’s convinced Providence is going to be able to offer better care, even after having made some tough choices. He points to the expanded use of AI technologies to improve efficiencies and reduce the administrative burden on clinicians.

“Even though access may have been reduced because we've been forced to do that, our focus and discipline and our faith and optimism will actually help the communities we serve,” he says. “And that is our mission, to care for those in our community, especially people who are poor and vulnerable.”

“We've removed so much distraction for things we could do over the past decade that we can't do anymore, so that we can stay true to what we have committed ourselves to do, in the core of wellness and care for the communities we serve,” he adds.