In 2023, St. Louis-based Ascension was sitting on $3 billion in operating losses. Three years later, the system shaved nearly $2.9 billion off that figure, reporting a $120 million operating loss (-0.2% margin) in fiscal 2026, a $371 million improvement from the prior year.
Saurabh Tripathi, Ascension’s executive vice president and CFO, told Becker’s this financial turnaround didn’t come from a “big bang” approach, but from steady, daily improvements.
“Big-bang restructuring can help you in one year, maybe two years, but it doesn’t help you provide long-term sustainable strength,” he said. “What we are trying to do at Ascension is have key clinical [key performance indicators] — patient volume, labor cost, supplies, drugs, length of stay — and consistently improve on those metrics every single day, every single month.”
The turnaround began when Ascension reviewed its portfolio and made a “conscious decision” to divest markets where it lacked strong payer contracts or a strong presence. The system then shrank from 140 hospitals to 91 wholly owned facilities and 27 joint venture hospitals, reducing losses by $575 million and freeing up about $500 million.
Mr. Tripathi said Ascension reinvested roughly $1 billion from reduced losses and freed-up capital into its existing facilities, which has helped drive improved volume and operating performance.
“We started a new term called ‘relentless incrementalism,’ where every day you come in, focus on a small, tiny improvement on a consistent basis, whether it’s volume, cost, efficiency, length of stay — all the key metrics,” he said. “That relentless incrementalism is paying off, and that’s what we are seeing in our financial results.”
For example, a daily report is sent at 6 p.m. to every Ascension hospital president and CFO to show what their daily volume is, including how many patients were seen, discharges, emergency department, inpatient and outpatient visits. It also includes how the system is tracking month over month and year over year versus its budget. Ascension also tracks length of stay at its facilities, which helps reduce operating costs.
While Ascension has seen significant improvements in its overall bottom line, Mr. Tripathi said the work is not over.
“We will never be done,” he said. “This is a journey of consistent improvement every single day, every single month. Where I see Ascension continuing to grow is in ambulatory space, and that’s why we made a strategic investment in AmSurg.”
Mr. Tripathi urged other system finance leaders to work hand in hand with operators, and stressed the importance of composure.
“I truly believe CFOs have to be the duck-style leadership, where you are pedaling fast under the water, but really calm and collected on the top,” he said. “People look at CFOs as the sign of stability of the organization, and if they are unsettled or frustrated or nervous, that doesn’t signal well for the organization.”
AmSurg integration boosts outpatient strategy
Ascension finalized its $3.9 billion acquisition of AmSurg in June, expanding its ASC footprint from 58 centers to more than 300 across 34 states.
Roughly four months in, Mr. Tripathi said the integration is tracking ahead of expectations on synergies, payer contracting and site-of-care migration.
“The volume is shifting from acute care to outpatient as we expected,” he said. “We moved almost 4,000 surgeries to outpatient or to ASCs [and] that’s where Ascension has to continue to focus.”
The financial case is a margin case. AmSurg generates about $2 billion in annual revenue and roughly $500 million in EBITDA and an EBITDA margin in the 25% to 30% range against the 5% to 6% Ascension’s acute care business produces, according to Mr. Tripathi.
“Bringing AmSurg immediately lifts our EBITDA margin for the entire enterprise, Ascension and AmSurg combined, and that gives us a lot more capital, because higher EBITDA equals higher cash flow that we can redeploy back into the system,” he said.
That strategy mirrors the playbook Dallas-based Tenet Healthcare used to reshape its earnings profile through United Surgical Partners International. Ascension’s AmSurg acquisition marks a clear nod to that model, with both systems leaning heavily on scaled ASC platforms to drive growth, expand margins and shift more care into outpatient settings.
Mercy Care exit sharpens provider focus
The portfolio work is not finished on the payer side either. The system and Chicago-based CommonSpirit Health’s Dignity Health have agreed to transfer ownership of Arizona managed care plan Mercy Care to Aetna, subject to regulatory approval. Aetna has managed the plan’s daily operations and administrative services for more than 20 years.
Mr. Tripathi said the decision reflects Ascension’s focus on its core strength as a provider organization.
“The insurance part is probably not our core strength,” he said. “From a core strategy perspective, Mercy Care didn’t fit really well with Ascension or CommonSpirit, and it was a strategic move for both of us to give this ownership to someone who knows the health plan really well, Aetna.”
Mr. Tripathi said the sale will free up at least $1 billion for the two systems jointly, money both intend to redeploy into their provider operations.
The exit also continues a pattern. Ascension Wisconsin sold its 50% stake in Network Health in late 2023, and the system has stepped back from ACA marketplace participation in Texas.
The Mercy Care deal is also one example of an ongoing relationship between the two Catholic health systems. Mr. Tripathi said Ascension and CommonSpirit leaders regularly discuss ambulatory strategy, federal advocacy, revenue cycle operations and managed care as both organizations work through broader transformations.
“We constantly talk about our ambulatory strategy, how can we partner together in different states,” he said. “There are opportunities for both of us to work together as we think about HR 1 headwinds, as an example. How do we provide our voice in advocacy as senators on the Hill are trying to craft healthcare policy?”
He added that he and CommonSpirit CFO Mike Browning regularly trade best practices as both systems work through transformations. CommonSpirit narrowed its operating loss to $430 million, a -1% margin, in fiscal 2026 before $2.8 billion in special charges, most of it tied to its exit from Conifer Health Solutions.
HR 1 and ACA headwinds come into view
Health systems are also contending with softer elective surgery volumes, growing patient affordability pressures and insurance coverage shifts. The country’s largest for-profit health systems were among the first to report softness in elective volumes earlier this year, particularly in higher-acuity procedures such as orthopedics and cardiac care.
Asked whether Ascension was seeing similar pressures, Mr. Tripathi focused on the broader coverage headwinds facing hospitals rather than indicating that Ascension was experiencing the same elective surgery slowdown.
“I think the headwinds are there for all of us — the HR 1 headwinds and the shift from Medicaid to uninsured, from ACA to uninsured,” he said.
Ascension began preparing for the policy changes about a year ago, when HR 1 was still being contemplated, Mr. Tripathi said. The system has focused on helping Medicaid patients maintain eligibility, including supporting those subject to work requirements, while using care navigation to steer patients toward primary care rather than the emergency department when appropriate.
“These initiatives add up to roughly $100 million for Ascension over three years, and we believe that will more than offset our HR 1 impact,” he said.
The preparations come as coverage and affordability pressures increasingly shape patient behavior across the industry. Finance leaders at Banner Health, Trinity Health and HCA have reported rising uninsured volumes, greater out-of-pocket burdens and signs that some patients are delaying care.
