Providence’s roughly 120,000 employees can expect professional development, modernized equipment and more than $600 million in collective pay increases during 2026, health system President and CEO Erik Wexler wrote in an internal memo sent Monday.
The West Coast Catholic nonprofit, which runs 51 hospitals and more than 1,000 other sites across eight states, had marked 2025 with ominous warnings of a “polycrisis” for healthcare providers due to financial headwinds such as reimbursement shortfalls, tariffs, inflation and federal policy uncertainty.
The pressures led the organization to pause hiring and launch organizational restructurings with multiple rounds of layoffs. It also began offloading non-core care programs to partners and spun out units, like its Providence Ventures.
These decisions led the Catholic system to, for the first time in years, bring its quarterly operating income into the black for the three months ended Sept. 30, Wexler said in a November statement of Providence’s most recently reported quarter. Monday’s memo again described 2025’s cost reduction efforts as necessary for the system’s future.
“Thankfully, as we enter a new year, we are better prepared to support you—and the programs and facilities our communities rely on,” the executive told employees. “…We’re also able to invest more in pay increases this year than ever before, because of the difficult choices we made in 2025.”
The increased pay will comprise over $600 million, Wexler said, that Providence has committed to toward merit raises and market-related compensation adjustments, per the memo. Other support comes from updates to the system’s human resources and information systems portal for employees, called the Caregiver Service Portal (ServiceNow), related to ticketing responsiveness and experience.
Other portions of the memo promised Providence would continue its efforts to become “a market leader in training and education, supporting your professional growth and our commitment to developing talent from within,” and would “invest significantly this year to replace equipment and modernize our care settings.” Part of that work includes partnerships Providence cut to offload some of its non-core services, he added, such as its home care and hospice joint ventures with Compassus.
Wexler also paid lip service to technological innovation underway at the organization, specifically pointing to ambient technology adoption to reduce employees’ documentation burden.
“By ethically leveraging artificial intelligence and other technologies, we will improve outcomes and advance clinical breakthroughs through research, enhanced diagnostics and personalized medicine,” he wrote.
Across 2024, Providence reported nearly $31 billion in total operating revenues but a $644 million operating loss (-2.1% operating margin). Though Q3 2025 brought a $21 million operating income (0.3% operating margin), the system was still sitting behind 2024 across nine months with a $244 million operating loss (versus $155 million) and lower nonoperating gains.
Providence was also one of numerous health systems citing unsustainable expenses and flagging revenue growth when announcing layoffs last year. Industry analysts have predicted that nonprofit systems will likely remain cost conscious in 2026 and beyond as labor costs maintain steady increases and Medicaid funding cuts take effect.