Chicago-based CommonSpirit posted a $3.4 billion net loss in the third quarter of fiscal 2026 — compared to a $69 million loss during the same period last year — driven largely by costs tied to its exit from Conifer Health Solutions.
In February, it was announced that Dallas-based Tenet Healthcare would regain full control of the revenue cycle management company. Under the agreement, CommonSpirit will pay Tenet about $1.9 billion over the next three years. Overall, CommonSpirit expects to pay $2.2 billion to exit its Conifer contract. The system recorded the full loss in its financial report for the three months ended March 31.
In March, CommonSpirit Executive Vice President and CFO Michael Browning said the system believes it can significantly improve revenue yield and overall collections by bringing revenue cycle operations in-house. He said the 137-hospital system’s cost to collect is about double the industry average. Returning to the industry median would materially reduce overall costs, he said.
Revenue cycle insourcing is also expected to accelerate CommonSpirit’s Epic implementation.
“We have rethought the Epic implementation and will be making some changes to which parts of the country will be going on Epic sooner rather than later,” Mr. Browning said. “We should be able to accelerate the Epic implementation by a few years as well.”
The insourcing also aligns with CommonSpirit’s Project Impact initiative unveiled in October that aims to accelerate operational and financial performance improvements and move the system toward a more sustainable cost structure and operating model.
CommonSpirit has also been trimming its hospital portfolio. The system sold CHI St. Alexius Health Devils Lake (N.D.) — a 25-bed critical access hospital — to Grand Forks, N.D.-based Altru Health System in March. CommonSpirit is also in talks to sell three more hospitals to Altru and separately signed a definitive agreement to sell three Ohio hospitals to Pittsburgh-based UPMC.
Overall, CommonSpirit incurred $2.4 billion in special charges in the third quarter, including the Conifer contract termination costs. Excluding special charges and adjusting for the California Provider Fee Program, CommonSpirit recorded a net loss of $762 million in the third quarter of 2026, compared to net income of $114 million during the same period last year.
Adjusted to normalize for the California provider fee program, CommonSpirit saw its total operating revenue grow by 0.1% year over year in the third quarter, while total operating expenses grew by 5%.
In a May 15 statement, Mr. Browning said the system’s third-quarter results reflected a “dynamic healthcare landscape, where we’re seeing positive demand for our services alongside persistent financial headwinds.”
“Our focus remains firmly on long-term sustainability,” he said. “Through innovations in care delivery and targeted operational improvements, we are building resilience and ensuring we can continue to achieve our strategic goals.”
At the Becker's 11th Annual IT + Revenue Cycle Conference: The Future of AI & Digital Health, taking place September 14–17 in Chicago, healthcare executives and digital leaders from across the country will come together to explore how AI, interoperability, cybersecurity, and revenue cycle innovation are transforming care delivery, strengthening financial performance, and driving the next era of digital health. Apply for complimentary registration now.
