Renton, Wash.-based Providence reported a $21 million operating loss (-0.3% operating margin) in the second quarter of 2025, an improvement from a $123 million operating loss (-1.6% margin) during the same period last year, according to its Aug. 12 financial report.
The 51-hospital health system reported total operating revenue of $7.9 billion in the quarter ended June 30, up from $7.7 billion during the same period last year. Providence said the increased revenue was primarily driven by higher patient volumes.
Providence reported total operating expenses of $7.9 billion in the quarter, up from $7.8 billion last year. The system said it saw improvements in labor productivity due to continued focus on staffing, including a 43% decrease in agency contract labor and reductions from expense management initiatives. Supply expenses increased 9% year over year, driven by a 12% increase in pharmaceutical expenses.
Providence said its report reflects the significant progress that it has made responding to the “polycrisis” facing healthcare, including inflation, tariffs, new state laws on staffing and charity care, and ongoing denied or delayed payments from commercial insurers.
The health system also noted in the report that it is also bracing for the “significant impacts” from the One Big Beautiful Bill Act, which “threatens to intensify healthcare pressures.”
“I’m incredibly proud of the progress we’ve made and grateful to our caregivers and teams across Providence St. Joseph Health for their continued dedication,” President and CEO Erik Wexler said in an Aug. 12 news release. “The strain remains, especially with emerging challenges like H.R.1, but we will continue to respond to the times and answer the call while transforming for the future.”
Providence said in the report that it does not expect the most impactful provisions of the One Big Beautiful Bill Act will be implemented until 2027 or later, “thereby providing time to prepare and adapt.”
Mr. Wexler told Becker’s shortly after the bill’s passage that Providence “will not be able to completely mitigate the access to care impacts, nor will healthcare across the U.S.”
“Preparations for the possibility of this legislation have been underway since January and have already painfully reduced our staff by over 600 people, have begun to reduce programs and services where required, and are increasing pressure on the commercial payers to meet contractual obligations.”
