The phrase “no margin, no mission” is familiar in healthcare and widely credited to Sister Irene Kraus, the first woman to serve as chair of the American Hospital Association. The saying has long underscored the connection between financial performance and a health system’s ability to invest in patient care and its communities. And as financial pressures persist across the industry, the paths to stronger margins have looked different from one health system to the next.
Toledo, Ohio-based ProMedica spent years shrinking and refocusing the organization around its core health system, while Johnson City, Tenn.-based Ballad Health relied on consolidation and disciplined cost management after its 2018 merger. Executives at both systems said those decisions are helping position their organizations for an increasingly uncertain financial environment.
For ProMedica, a 10-hospital system spread across Northwest Ohio and Southeast Michigan, the work toward margin stability began years ago. The nonprofit system reported first-quarter 2026 operating revenue of $759.4 million, operating income of $52.3 million and a 6.9% operating margin. Terry Metzger, ProMedica’s CFO, told Becker’s getting there involved difficult decisions.
“We made a lot of tough decisions really coming out of the pandemic,” he said. “I’d say we really started to see that progress in 2023 going into 2024, but we recognized that the environment had fundamentally changed, and we really committed to a multiyear restructuring plan to really focus on long-term sustainability.”
That restructuring unfolded over several years and included exiting skilled nursing care, hospice and the insurance business, shrinking ProMedica from a $7 billion organization to a $3 billion health system centered on its hospital and physician operations. Mr. Metzger said discipline, combined with debt reduction and strategic investments, strengthened its financial position.
“While we were doing that restructuring out of those other areas of business, which was senior care, our nursing homes and our insurance business, we were concurrently working on better alignment of our health system within that restructuring, really focused on the core health system and building a more efficient organization,” he said. “That really meant reducing corporate overhead. We were really aggressive in that area, and shared services costs, including rightsizing, streamlining processes and procedures and creating a more integrated shared services experience.”
ProMedica also engaged an outside consulting firm to benchmark its corporate overhead and shared services cost structure, ultimately confirming it had reached a best-practices range. Supply chain discipline was tightened, with more than 95% of spending now flowing through supply chain. Premium labor, including agency and locum tenens costs, was also reduced.
One of the biggest strategic shifts, Mr. Metzger said, was deciding what ProMedica would no longer try to be.
“From the stop-doing perspective, we stopped trying to be a national player in the healthcare landscape,” he said. “Stopping that effort to branch out into those other areas really focused our capital and our opportunity costs and allowed us to really focus in on the performance of the health system.”
Mr. Metzger said the system also prioritized productivity. ProMedica now holds regular leadership reviews of productivity data, bringing operational leaders and human resources teams together to identify gaps and, when needed, conduct market reviews to remain competitive.
“None of this would have been really possible if it wasn’t for the staff, the team, the employees and their willingness to embrace change,” he said. “They really stayed focused on efficiency and delivering excellent care, and that is what has turned our strategy into real measurable results.”
Ballad Health took a different approach. The 20-hospital system, which serves Northeast Tennessee and Southwest Virginia, has spent much of the past eight years eliminating duplicative services created before the merger of Wellmont Health System and Mountain States Health Alliance. Those efforts have helped strengthen its financial performance. Ballad reported an operating EBITDA margin of about 9% through the first nine months of fiscal 2026.
Alan Levine, Ballad Health’s CEO, told Becker’s the work began when the system formed in 2018 and the conditions under which Tennessee approved the merger.
“One of the conditions the state put on us was that we needed to eliminate unnecessary duplication of services,” he said. “For instance, having two level 1 trauma centers within 20 miles of each other in a rural region was super expensive and, frankly, led to less-than-optimal quality.”
Ballad consolidated the two level 1 trauma centers and its two level 3 NICUs, among other services. Mr. Levine said those decisions helped the system control operating costs despite a payer mix that is only 21% commercial.
“For us to have any margin, we have to operate very efficiently, and out of necessity, we’ve done that,” he said.
On the labor side, after 2022 Ballad nearly doubled nursing wages across the board in response to workforce shortages, adding roughly $200 million in incremental annual costs. Mr. Levine said the system has since looked for additional efficiencies and opportunities to optimize reimbursement, including renegotiating payer contracts.
He said Ballad also benefited from a Tennessee Medicaid waiver approved in 2025 that brought state-directed payments to systems with high Medicaid volume.
Even with stronger margins, both executives acknowledged the financial outlook remains uncertain. Proposed federal Medicaid cuts would affect both systems, though in different ways given their payer mix and reliance on government reimbursement.
Mr. Metzger said ProMedica’s response has been to continue building financial resilience.
“There’s no doubt that there’s a lot of uncertainty for us, and that’s why we felt we needed to have a really efficient financial operation to weather not just the regulatory uncertainty but also disruptions in the marketplace,” he said.
Mr. Levine said hospitals with larger commercial populations and greater reliance on state-directed payments may face a more difficult adjustment if those programs are reduced.
“I suspect a lot of hospitals that have had a higher commercial mix and have also been benefiting from state-directed payments and other programs are going to get hit pretty hard as those programs are predicted to get cut,” he said. “We’re going to get hit hard by state-directed payment cuts too, but I also think Congress and CMS are sensitive to the issues facing rural systems.”
Both executives emphasized that improving margins was about creating the financial capacity to invest in care, not simply reducing expenses.
“When you look at our results, it isn’t just a cost-cutting exercise,” Mr. Metzger said. “It’s really been a strategic refocusing. They see us as really reinvesting in our high-acuity care and strengthening our clinical capabilities. Financial sustainability can really also generate really high-quality and good clinical care at the same time, and the marriage of those two has been important.”
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