Providence Health Plan will completely shut down after it was unable to reach a deal with a national insurer to operate its Medicare Advantage business.
“We are in discussion with regulators about this development and the broader wind-down of Providence’s health plan operations,” a spokesperson for the system told Becker’s. “We will share more details with our members and the public as we are able under applicable regulations.”
In May, the Renton, Wash.-based health system said it would shutter most of its insurance business beginning in 2027 after operating more than 40 years as a regional payer and serving more than 440,000 members.
At the time, President and CEO Erik Wexler said state and federal regulations and consolidation among large insurers had left Providence “in an untenable situation” and unable to continue operating the health plan.
The Portland, Ore.-based insurer said it would exit the ACA market, stop renewing employer group contracts, and transfer its Medicaid and Medicare supplement programs to other organizations. It had hoped to reach a deal with an unnamed national insurer to “potentially operate” its Medicare Advantage business, which has more than 64,000 members.
The shut down affects more than 260,000 commercial members and more than 58,000 Medicaid enrollees, predominantly in Oregon. The Portland, Ore.-based plan also partially administers benefits for public employees in the state and employs 1,150 people, which it said would be offered transitional resources.
The health plan reported a $102 million net loss on $2.5 billion in revenue in 2025, driven by rising utilization and a prior drop to a 3.5-star Medicare Advantage rating. Plan CEO Don Antonucci previously told Becker’s that the plan was working toward financial stability this year after implementing pricing adjustments, exiting underperforming markets and cutting administrative costs, including layoffs. The plan had also rebounded to a four-star MA rating for both 2026 and 2027 revenue years.
Providence’s broader financial picture has weighed on its options. The system posted a $486 million operating loss on $29.5 billion in revenue in 2025, an improvement from a $546 million operating loss the prior year but still reflecting sustained pressure from labor, supply and regulatory demands. The system has been aggressively restructuring, selling its health IT consulting arm, its clinical decision support platform, and 10 skilled nursing facilities, among other divestitures.
The 51-hospital system’s first-half operating income has improved by $400 million year over year, moving from a $225 million operating loss in the first half of 2025 to $175 million in operating income through June 30, 2026. Operating EBITDA for the first half of 2026 was $914 million, a $422 million improvement over the prior year.
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