Renton, Wash.-based Providence is exploring the potential sale of its insurance arm and divesting select hospital and health system assets as part of a broader push to stabilize finances and sharpen its strategic focus.
The 51-hospital, faith-based system said it is reviewing “strategic options” for Providence Health Plan — including a potential sale — as it combats ongoing operating losses and industry headwinds.
Executive Vice President and CFO Greg Hoffman, who is retiring in June, said the move aligns with Providence’s efforts to focus on core care delivery and long-term financial sustainability.
“The exploration is part of our broader strategy to ensure we are best positioned to deliver high-quality care and maintain financial strength,” Mr. Hoffman said in a statement shared with Becker’s.
Providence Health Plan, headquartered in Portland, Ore., reported a $102 million net loss on $2.5 billion in revenue last year, driven by rising medical and pharmacy utilization and a decline in its Medicare Advantage star rating. President and CEO Don Antonucci told Becker’s the plan is expected to return to stability this year after implementing pricing adjustments, exiting underperforming markets and reducing administrative costs.
The potential divestiture comes as smaller, regional health plans face mounting pressure from rising healthcare costs, affordability constraints and growing technology investment needs — challenges that larger insurers are better positioned to absorb.
A sweeping portfolio reset
The health plan review is part of a wider “portfolio optimization” at Providence, which has been actively evaluating its assets, partnerships and service lines.
Providence plans to sell Queen of the Valley Medical Center — a 198-bed hospital in Napa, Calif. — to Fairfield, Calif.-based NorthBay Health. The sale is expected to close by the end of 2026, pending regulatory approvals.
Separately, Providence Mission Hospital Laguna Beach (Calif.) plans to phase out acute care and emergency services over multiple years, citing low patient volumes and the high cost of required seismic upgrades. On average, 80% of the hospital’s 159 beds are unused each day, a spokesperson for the health system told Becker’s.
The system estimates it would need to invest about $300 million to meet state mandates, along with an additional $50 million for infrastructure upgrades.
Providence has also divested non-core assets, including the Jan. 1 sale of its clinical decision support tool, MedPearl, to Health Endeavors, according to financial documents published March 26. The system entered into a multiyear agreement to continue using the platform while shifting ongoing investment responsibilities to the buyer.
Providence also sold its health IT consulting arm — Tegria Services Group — to healthcare-focused investment firm Altaris in January.
Last year, the system also sold 10 skilled nursing facilities across four states — Alaska, Washington, California and Oregon — to The Ensign Group and transitioned its home health and hospice business to a joint venture with home-based care firm Compassus, part of a broader restructuring.
“These were important and courageous decisions that allow us to focus on and invest in the core services we provide,” Providence President and CEO Erik Wexler told Becker’s in December. “This will be critical for 2026 and beyond.”
Providence previously offloaded revenue cycle management company Acclara to R1 RCM for $675 million in 2024. The transaction included a 10-year agreement for R1 RCM to provide comprehensive RCM services for Providence.
“We are diligently reviewing our programs and facilities to ensure Mission sustainability,” the health system said in its March 26 financial report. “This includes leveraging technology to ensure we continue to meet community needs with more limited resources … [and] also involves evaluating whether we are the best provider of certain services or if others are better suited to deliver and expand access to care.”
Losses narrow, but pressure remains
Providence’s strategic moves come as it continues to face operating losses, though performance has improved modestly.
The system reported a $486 million operating loss (-1.7% margin) in 2025, compared to a $546 million loss (-1.9% margin) in 2024 and a $1.2 billion operating loss (-4.2% margin) in 2023.
Net loss totaled $238 million in 2025, compared to $231 million the year prior.
Total operating revenue rose to $29.5 billion, up from $28.1 billion, driven by higher patient volumes. However, operating expenses also increased to $29.6 billion from $28.4 billion, reflecting continued pressure from labor, supplies and purchased services.
“Throughout 2025, our teams demonstrated strong financial discipline and operational focus,” Mr. Hoffman said in a March 26 news release. “We managed expenses responsibly, improved productivity and continued to enhance the efficiency of our care delivery. These efforts helped us navigate reimbursement, regulatory, inflationary and workforce pressures while supporting high-quality care for the communities we serve.”
Providence also recorded $354 million in restructuring costs in 2025, up from $183 million in 2024, tied to efforts to streamline operations and refocus its portfolio.
“Our results reflect not only improved operating performance but also an intentional strategy to transform our operating model. Over the past year, we have integrated previously siloed functions, streamlined leadership structures, and refined and focused our portfolio on core services, allowing us to direct more resources to the front lines of patient care,” Mr. Wexler said. “These actions are positioning Providence for long-term sustainability and a strong trajectory into 2026.”
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