Providence exits most of its insurance business for 2027 to refocus on care
The 51-hospital nonprofit's plans covered 440,000 people but lost $100M+ in 2025; from 2027 Providence keeps only Medicare Advantage, via a national partner.
What was changed
Providence, one of the largest nonprofit health systems in the US with 51 hospitals across the western half of the country, announced in May 2026 that it will shut down most of its health insurance business. From 2027, its Providence Health Plan and Providence Health Assurance subsidiaries — which have offered coverage for decades and cover about 440,000 people in a handful of western states — will stop offering Medicaid, Affordable Care Act and employer-sponsored plans.
CEO Erik Wexler framed the exit as forced by structure, not failure of will: state and federal regulation has made it 'increasingly difficult for regional, not-for-profit health plans like PHP to thrive', larger insurers have consolidated enough to operate more efficiently, and 'it has become harder to support both running a health plan and delivering care'. The division lost more than $100 million in 2025, by Providence's own financial disclosures, while the system has not posted an annual profit in four fiscal years.
The exit is partial by design: Providence is seeking a buyer for its Medicaid plans, will stop offering individual and family plans on ACA exchanges for 2027, and will not renew employer group plans as contracts come up. It aims to keep its Medicare Advantage members covered through a partnership with a national carrier, in final negotiation when the announcement was made.
The move completes a financial reset. Providence first said in March 2026 it was exploring a sale of the insurance division; in Q1 2026 the plans, held for sale, reported almost $35 million of income that helped boost the system's quarterly gain — early evidence, the system argues, that it is righting the ship. Baylor Scott & White made a parallel exit from Medicaid and ACA plans the same April, and CVS's Aetna and Cigna also retreated from ACA and Medicare Advantage markets.
Why it worked
It is a clean portfolio decision: a nonprofit hospital system choosing to be a care provider rather than an insurer, because the insurance economics have changed under it.
The numbers make the logic legible — a $100M annual loss in the plans against a system that hasn't had a profitable year in four.
The staged execution (Medicaid sale, ACA exit for 2027, employer non-renewals, MA partnership) shows how to unwind a regulated business without dropping members.
It generalises: regional health plans with strong local brands are attractive assets for national carriers — which is exactly why selling beats running them at sub-scale.
What can be applied
Regional scale that works for hospitals doesn't work for insurance: when national carriers consolidate, a mid-size health plan becomes a losing side bet worth exiting.
Aftermath
Providence was still finalising the Medicare Advantage partnership and hunting a buyer for the Medicaid plans when the news broke in May 2026; a spokesperson declined to say how much the sales were expected to bring in, and final proceeds were undetermined as of the system's 11 May financial results. The exit sits on top of a broader push to shore up finances: the system says recent momentum — including the plans' held-for-sale income lifting Q1 2026 — is evidence it is righting the ship after four fiscal years without an annual profit.