'The losses were so large': Washington hospitals in 'dire' financial straits in 2022

The Washington State Hospital Association (WSHA) is sounding the alarm on the financial health of hospitals statewide. Officials warn that hospitals in the state have lost millions in the first quarter of 2022.

The association calls the situation "dire," and if the balance sheets don't start to add up, it means some hospitals could be cutting beds and services—or could even close their doors.

"We are seeing real-world impacts starting to happen," said Cassie Sauer, CEO of WSHA. "The financial challenges revealed by the survey are really quite grave."

A survey from the Washington State Health Association shows that both urban and rural hospitals are in financial trouble statewide.

"Without any help, we have potential to see hospitals close within the next year," said Cassie.

The chief financial officer for WSHA said the survey shows that, while revenues increased 5% in 2022 over 2021, expenses far outpaced them, growing by 11%. The total net loss for the hospitals was a massive $925 million for the first three months of 2022.

"This is a negative 13% net loss, and this level of losses is unsustainable," said WSHA CFO Eric Lewis. "It is like nothing I’ve seen in my career, and hospital officials around the state are very concerned about this."

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Eric said the reasons for the losses include low Medicaid reimbursement, which hasn't had a rate increase in 20 years, with some hospitals reporting payments covered just 42% of costs. He says high inflation and labor shortages also played a role, along with a 200% increase in temporary labor spending and a number of patients that have been unable to transfer into long-term care or nursing facility care when needed.

"Today, we have 45 patients that do not require our services, but need some type of long-term acute care," said EvergreenHealth Chief Nursing Officer Mary Shepler. "These people deserve to have group therapy, they deserve to have dinner with a group of people, they deserve to go outside [on] a whim."

Shepler said the cost for the patient's care is about $1.3 million for one week, with 1,600 excess days total in the hospital. She believes that the community will see a reduction in services statewide if the trends continue for hospitals. 

"Providence closed down pediatrics at their hospital… or reduced services because there’s just not enough beds. All of us are slowing down on non-urgent and emergent surgeries," said Shepler. "I also think about it, patients with knee pain, back pain, need those surgeries, right? But, we are slowing down those services and delaying them because of our current situation."

WSHA didn't have specifics on a timeline or location for any future hospital closures, citing an $8 million state emergency fund that some hospitals will apply for. However, officials say it's concerning overall.

"There are some rural hospitals, because of low cash position, are at risk of closing in the next year. But, I think the urban hospitals, the losses were so large, in the first quarter, ultimately, their viability is threatened," said Lewis.

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Survey responders believe that maternity and behavioral health services could be some of the services that are first to go if hospitals are forced to take action.