With hospital margins under significant strain and coverage headwinds mounting — from Medicaid cuts to the looming expiration of ACA subsidies — Livonia, Mich.-based Trinity Health is reshaping its strategy for the years ahead.
Under CEO Mike Slubowski, the faith‑based nonprofit is ramping up ambulatory care, home‑based services and its older adult care offerings, including its Program of All-inclusive Care for the Elderly (PACE). The health system’s growth and transformation goals aim to close a widening financial gap and ensure access to care for vulnerable and underserved populations.
A $1.5 billion gap — and the plan to close it
Mr. Slubowski does not sugarcoat the challenge.
“A lot of the damage has already been done with the [One Big Beautiful Bill Act], with the reduction in Medicaid enrollment, as well as the death by 1,000 cuts that keep happening with Medicare payment,” he said.
“We’ve identified a $1.5 billion gap annually for us to close, and that’s excluding what may happen with ACA subsidies. The good news is we saw this coming … and have been developing plans on both the cost and the revenue side to close that $1.5 billion gap, which is on top of the gap we have to close every year between inflation and payment increases of over a billion dollars.”
That projection is a substantial risk tied to funding changes. Trinity Health estimates the impending Medicaid cuts will inflict a $1.5 billion blow across its 92 hospitals. On average, Medicaid covers 20% of the patients Trinity Health serves — with some communities at 25%. For its nursing homes and long-term care facilities, Medicaid is often the predominant form of coverage.
To address this challenge, the system in the spring launched Repositioning Trinity Health, a sweeping initiative to transform its cost structure, revenue model and care delivery approach.
“There’s been a lot of great, creative work happening across our ministry — work that requires both radical thinking and what we call a ‘beginner’s mindset,'” Mr. Slubowski said.
The mindset he emphasized is pushing leaders across the health system to think differently, question legacy models and ask: “If we were starting from scratch, how would we deliver the best care and be a transforming presence in our communities?”
That mindset shift is helping Trinity Health streamline care where possible, redesign core processes and reducing costs to remain a strong, sustainable ministry for the communities it serves across 27 states.
“The reality is, with reductions in Medicaid and potentially ACA subsidies, more people will become uninsured — and many will end up in our emergency departments,” he said. “So, we’re building processes to better meet people at the ED door and redirect them when possible — through urgent care, primary care, or more efficient inpatient throughput. We’re also working on improving payment plans to make care more affordable, and we’ve focused on the pricing of shoppable services like imaging, making sure we don’t apply hospital-based pricing models to outpatient care.
“We’re confident we can get there, but it’s not easy.”
Betting on outpatient, ambulatory and home‑based growth
At the core of Trinity Health’s new strategy: growth not in inpatient beds but in lower-cost, higher-volume settings.
“Of our seven strategic priorities, the four we’re really focused on are growth, exceptional member experience, exceptional colleague experience and transformation,” Mr. Slubowski said.
Growth is not about building more hospitals. Instead, it is about expanding ambulatory and outpatient services, and scaling home‑based care and PACE. Those areas have been growing at a steady 8% to 10% annually, with plans to accelerate.
“We’re actually the largest not-for-profit PACE provider in the country [and second-largest overall], and we’ve moved into markets where we don’t operate hospitals or physician groups,” Mr. Slubowski said. “We know how to do it well and can partner with others to expand that work.”
Getting smarter — and leaner — with ‘transformation’
He emphasized that “transformation” is more than a buzzword at Trinity Health; it is a full-scale operating model overhaul. As part of the Repositioning plan, the system is reengineering clinical workflows, embracing technology and rethinking where and how care is delivered.
Even in the AI space, Trinity Health is cautious yet deliberate.
“There are a bazillion vendors out there trying to sell us the next cool thing in AI, but we’re taking a more grounded approach,” he said.
Rather than chasing every new vendor, the health system is leveraging its core systems. By spring 2026, it expects to be the largest single‑instance user of Epic in the country, and aims to benefit from the company’s AI capabilities across its ministries.
“We want to maximize that value before we go out and buy new tools,” he said.
This conservative, platform‑first approach may pay dividends as cost discipline and operational efficiency become increasingly essential in the current landscape.
Financial strength and smarter capital deployment
Despite rising pressures, Trinity Health ended fiscal 2025 with encouraging headline performance. The system grew operating revenue by 6.6% to $25.4 billion and boosted net patient service revenue by 5.2%, driven by volume and improved payment rates. On top of that, investment earnings and proceeds from divestitures — including the cash windfall from its exit from a joint venture with BayCare — pushed net income to $1.3 billion, up sharply from $475.5 million the previous year.
But those numbers masked a slight operating loss. Trinity Health reported a $12.2 million operating loss (0% margin) for 2025 (roughly flat, compared with a larger loss in 2024). Mr. Slubowski and his team see this as a call to action, not a cause for complacency.
That is partly why divesting joint ventures — such as the partnerships with Clearwater, Fla.-based BayCare and Atlanta-based Emory Healthcare — makes sense for Trinity Health. Not just as liquidity events, but as moves that free up capital for ambulatory and outpatient growth, where the returns (financial and strategic) may be greater and more sustainable.
Divesting from these two JVs generated about $4.3 billion in capital for Trinity Health.
“We’re making investments in growth in areas such as our medical groups, PACE, ambulatory surgery and freestanding imaging services,” Mr. Slubowski said. “Those are really the areas where we’re putting the most capital to work right now.
“It’s a mix of strategies. We’ve done some de novo development, bought into existing partnerships with physicians, and we’re also part of joint ventures that were formed years ago. In some of those, we’re now increasing our ownership by buying out a portion of our physician partners’ stakes.”
