Three of the nation’s largest Catholic health systems reported markedly different financial results through the third quarter of fiscal 2026 as rising labor costs, portfolio restructuring, revenue cycle overhauls and reimbursement pressures continue to reshape hospital operations.
While Trinity Health maintained stable margins and Ascension narrowed losses through aggressive cost management and divestitures, CommonSpirit faced mounting operational challenges and billions in charges tied to its exit from Conifer Health Solutions.
Here’s how CommonSpirit, Ascension and Trinity Health performed through the first nine months of fiscal 2026:
Chicago-based CommonSpirit reported an operating loss before special charges of $1.2 billion for the nine months ended March 31, a -4% operating margin, compared to a $438 million operating loss and -1.5% margin during the same period last year.
Normalized for the California Provider Fee Program, the operating loss before special charges was $743 million, or a -2.4% margin, compared to a $282 million loss and -1% margin in the prior-year period.
Total operating revenue reached $29.9 billion, up from $29.2 billion a year earlier. On a normalized basis, revenue totaled $30.8 billion, up $1.3 billion year over year. Net patient and premium revenue increased $1.6 billion, or 6%, driven by higher volumes, improved rates and approval of the Nebraska provider fee program.
Operating expenses rose to $31.1 billion from $29.6 billion. Salaries and benefits climbed $741 million, or 4.9%, to $15.7 billion. Supply costs increased $334 million, or 7.1%, reflecting higher surgical volumes and continued inflation in pharmaceuticals and medical supplies.
The third quarter marked a significant deterioration from year-to-date trends. CommonSpirit posted a normalized operating loss of $578 million in Q3, a -5.8% margin, compared to an $85 million loss and -0.9% margin during the same quarter last year. Management attributed the weaker quarter to revenue yield pressures, lower case mix and acuity, collection performance challenges and unfavorable payer mix shifts.
The system’s headline losses were driven largely by its exit from Conifer Health Solutions, the revenue cycle management company jointly owned with Dallas-based Tenet Healthcare. CommonSpirit recorded a $3.4 billion net loss in the quarter and a $2.7 billion net loss through the first nine months of fiscal 2026, including $2.5 billion in special charges related to the Conifer exit.
Under the agreement, CommonSpirit will pay Tenet approximately $1.9 billion over three years, with total exit costs estimated at $2.2 billion. CFO Michael Browning said bringing revenue cycle operations in-house is expected to significantly reduce costs and accelerate the system’s Epic implementation timeline.
Despite the financial strain, operational metrics improved. Adjusted admissions increased 4.3% year over year through the first nine months, while acute average length of stay improved to 4.62 days from 4.74 days.
CommonSpirit ended the period with $17.2 billion in unrestricted cash and investments, equal to 154 days cash on hand. Total debt rose to $21.5 billion from $19.8 billion following a $3.6 billion bond issuance in October 2025.
St. Louis-based Ascension reported an operating loss of $203 million through the first nine months of fiscal 2026, improving from a $466 million operating loss during the same period last year. Its operating margin improved to -1.1% from -2.4%.
The results reflect ongoing operational improvements alongside the financial impact of major portfolio divestitures. Since 2022, Ascension has reduced its footprint from 139 hospitals to 90 facilities.
Total operating revenue declined to $18.1 billion from $19.5 billion, while operating expenses fell to $18.3 billion from $20 billion. Salaries and wages decreased $810 million year over year to $7 billion, reflecting the smaller hospital footprint and workforce reductions tied to divestitures.
Recurring operating losses narrowed to $165.6 million from $381.2 million, signaling operational progress after excluding impairment charges and other nonrecurring items.
Net patient service revenue fell to $16.1 billion from $17.5 billion. The system also reported a shift in payer mix, with self-pay and other revenue rising to 7% of net patient service revenue from 3.7% a year earlier. Medicare’s share declined from 35.7% to 33.2%.
Ascension posted net income of $620.9 million through March 31, up from $195.4 million during the same period last year. The increase was driven primarily by investment returns, which generated $1.1 billion in nonoperating income.
Unrestricted cash and investments rose to $18.2 billion, while total assets reached $44.6 billion.
Strategically, Ascension continued reshaping its portfolio. The system sold four Michigan hospitals to South Bend, Ind.-based Beacon Health System in July 2025 and is pursuing its planned acquisition of Amsurg, an ambulatory surgery center management company.
Livonia, Mich.-based Trinity Health posted the strongest operating performance among the three systems, reporting $200 million in operating income through the first nine months of fiscal 2026. Its operating margin remained stable at 1%.
Operating revenue increased $1 billion year over year to $20 billion. Net patient service revenue rose $503.4 million, or 3.1%, driven by higher payment rates and patient volumes. Premium and capitation revenue jumped 31%, fueled by growth in the system’s health plans and PACE programs.
Operating expenses climbed 5.4% to $19.8 billion. Labor remained the largest pressure point, with salaries, wages and benefits rising $289.3 million, or 2.9%, despite a 0.7% reduction in full-time equivalent positions. Salary rates increased 3.5%, while contract labor costs rose 7.3%.
However, Trinity Health said adjusted operating costs per case mix-adjusted equivalent discharge increased just 2.1%, below the rate of medical inflation.
Net income reached $1.1 billion, or a 5% margin, compared to $725.4 million and a 3.7% margin in the prior-year period. The increase was largely driven by stronger investment earnings.
Trinity Health ended the quarter with $16.1 billion in unrestricted cash and investments, equal to 230 days cash on hand. Total assets were $36 billion and long-term debt totaled $6.3 billion.
The system also continued reshaping its portfolio, including the sale of MercyOne Siouxland Medical Center in Iowa and a planned sale of Mercy Medical Center in Springfield, Mass., to Baystate Health.
Trinity Health flagged Medicaid and ACA policy changes as major risks to future performance, warning that tighter eligibility requirements and limits on provider financing mechanisms could increase uninsured and self-pay volumes across key markets.
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.
