November 28, 2022

Business Update Blog

WA hospitals’ financial losses in 2022 climb toward $1B

Washington State Hospital Association representatives on Thursday said a recent review of the financial health of hospitals offered grim totals.

While operating revenue increased by 5 percent at hospitals in the state, operating expenses increased by 11 percent, they said.

“This combined with non-operating investment losses, resulted in a total margin of negative 13 percent,” WSHA said. “The net loss for hospitals across Washington state was approximately negative $929 million for the first three months of 2022.”

“This level of loss is unsustainable,” Eric Lewis, chief financial officer for WSHA, said at Thursday’s briefing. “It is like nothing I have seen in my career.”

WSHA noted that urban hospitals saw the bulk of the losses, but many rural hospitals also were struggling. The association and hospital representatives on Thursday blamed low Medicaid reimbursements along with the ongoing pressures of pandemic and non-pandemic-related expenses including labor, among other issues.

COVID relief funding from the federal government also has been tapped out, the officials noted.

Additionally, WSHA said Medicaid payments for some hospitals “covered just 42 percent of the cost of delivering care in Q1.”

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This image shared by the Washington State Hospital Association on Thursday shows aggregate totals for 97 percent of acute care hospitals in the state. Washington State Hospital Association

A combination of increasing labor costs to retain current workers, along with the continued reliance on more expensive traveling nursing staff, also put the squeeze on hospitals, along with the rising cost of the difficult to discharge patients — those with no place to go and/or in need of guardianship to make a transfer as allowed by state law.

Susan Stacey, chief executive for Providence Inland Northwest Washington, which serves the Spokane area, said it has cost about $50,000-$75,000 a day for long-length stay patients, “and we receive no payment.”

Stacey and others felt that addressing the difficult-to-transfer patients problem could bring some of the most immediate relief.

“We need the state to act now to help hospitals to get these patients into appropriate settings so we can continue to focus on the care that is so essential to our communities — trauma services, critical care services, you name it,” said Chelene Whiteaker, senior vice president for government affairs with WSHA.

Longer term the group is calling on the state Legislature for help in increasing Medicaid rates to hospitals, along with funding for more long-term care options and behavior crisis intervention options prior to an ER visit, she noted.

“Behavioral health will be another priority for us in the 2023 session,” Whiteaker added.

In the survey, hospitals reported increasing the use of temporary staff by 84 percent, with the hourly rates rising by 63 percent, year over year.

“All 52 urban hospitals/health systems reported negative margins and account for 86 percent of the losses statewide,” WSHA noted. “Of the independent rural hospitals responding, 18 out of 32 had negative margins.”

Cassie Sauer, president and CEO of WSHA, said the losses put hospitals at risk for bankruptcy or foreclosure.

“Some beds and services are being pared back. And that’s contributing to the acute care hospital capacity crisis in multiple areas of the state,” she told reporters Thursday.

In Tacoma, a MultiCare representative attending Monday’s WSHA briefing on strained hospital capacity noted that system was relying on more than 1,000 traveling staff, as its hospitals continue to run beyond 100 percent capacity, and about 180 patients are unable to be discharged/transferred because of either lack of capacity at skilled care facilities or guardianship issues.

The nonprofit now faces an operating loss of $194 million out of $300 million in total losses so far this year.

The health system did receive $289,434,806 in CARES Provider Relief Funding, to be used in support of lost revenue and increased expenses since the pandemic’s start.

According to information provided by the health system, “Increased expenses would relate to personal protective equipment, door screeners, installation of ventilation system to protect patients in areas of our hospitals that weren’t previously set up for this kind of care, purchase of ventilators, renting of tents for surges in patient volumes beyond the capacities of our current facilities, purchase of medications to help in caring for COVID positive patients, etc.”

In response to questions, MultiCare media representative Marce Edwards Olson told The News Tribune on Thursday via email that the system “is looking closely at all of our operations to determine where we can ensure the viability of our organization and ensure our continued service to patients and communities.”

She added, “We are evaluating a number of ideas and there may be some service changes. We don’t have anything to share right now.”

Virginia Mason Franciscan Health, in an emailed statement told The News Tribune: “Similarly to other hospitals in the state, Virginia Mason Franciscan Health continues to experience significant losses due to several factors, including increasing labor costs, ongoing staff shortages and an increased number of patients waiting for guardianship to be established.”

It added that “We currently have 27 patients who no longer need hospital-level care but are unable to be discharged. Combined, they have been within our system for a total of 3,450 days which represents an estimated 862 patient stays. We are utilizing our Mission Control Command Center to manage these issues and we’re working to ease strain through various strategies, including reducing the number of cases we’re accepting, to ensure we can care for all of our patients.”

This story was originally published July 21, 2022 4:09 PM.

Debbie Cockrell has been with The News Tribune since 2009. She reports on business and development, local and regional issues.

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