The rating agency said in a March 5 report that it believes Providence’s “substantial size, diversity, and scale, along with its recent operational improvement initiatives, support a higher rating than indicated by some of its operational metrics.”
Providence recorded an operating loss of $644 million (-2.1% margin) in 2024, an improvement from an operating loss of $1.2 billion (-4.1% margin) in 2023.
Fitch said that Providence’s 2024 loss fully accounted for several one-time costs, such as a $180 million restructuring charge related to a reduction in force and asset write-downs, lower-than-expected Medicare rates of about $75 million to $100 million, and a change to Oregon’s laws related to presumptive charity. Fitch said that without these one-time costs, Providence’s operational losses would have been several hundred million dollars closer to break-even.
Providence decreased its top cost driver — personnel costs as a percentage of total revenue — to 51.2% from 53%. Fitch also noted that agency contract labor costs have decreased by 70% since peaking in 2022.
The system saw operational gains through its “recover and renew” initiatives and is now shifting toward a “reimagine and revitalize” initiative, Fitch said. This plan features a five-year focus on workforce redesign to address ongoing labor shortages. Providence will invest in artificial intelligence, genomics and precision medicine, as well as leveraging partnerships and technology platforms.
Fitch said that the system has invested heavily in technology in recent years and it believes “this provides Providence with a strategic advantage over many of its peers.”
