Washington hospitals risk reducing healthcare services amid financial struggles

Bankruptcy, closures and reduced services—going out of business is the potential fate of hospitals across Washington struggling in a financial crisis.

This dire situation is already affecting at least two communities in the Puget Sound.

97% of hospitals across the state participated in a financial survey conducted by Washington State Hospital Association (WSHA). Officials reviewed financial reports from the first six months of 2022. The result: unsustainable losses that could affect the people who need health care.

"Our biggest concern is it’s putting patient care at risk in many communities across the state. And jeopardizing patient’s ability to get the hospital care that they need," said Cassie Sauer, chief executive of WSHA. 

The association said its financial survey revealed hospitals in Washington had a net loss of $1.75 billion during the first half of this year. This total was operating losses combined with investment losses. The total operating expenses alone increased by 11% compared to 2021.

 "We are already seeing service cuts, limits on hospital admissions. And possibly, without action, we could see hospital closures," said Eric Lewis, chief financial officer for WSHA. "We already have fewer hospitals per capita than any other state. Once a hospital closes, that community will not have access to timely emergency and specialty care."

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The association said the lack of funding is causing hospitals across the state to reduce care. Officials said hospitals in Yakima are reducing the number of beds, and services in Whidbey Island are scaling back. Mike Marsh, the CEO of Overlake Medical Center in Bellevue, said they closed one of their urgent care centers.

"We do frequently find ourselves looking at our surgery schedule and considering postponing surgeries in order to open up a surgical bed that can manage a medical patient that comes through the ER, which is a major inconvenience to the individuals who need the surgeries," said Marsh.

WSHA said hospitals were already operating on tight budgets, even with the support of federal COVID-19 relief funds. Now that money has run out, and the new losses are due to staff shortages and high inflation causing the cost of labor, drugs and supplies to rise faster than payment rates.

"All at a time that reimbursement’s been stagnant, no increase in Medicaid funding in two decades—20 years—at a time that Medicaid is only paying maybe two-thirds of the cost of care," said Alex Jackson, chief executive and senior vice president of the Inland Northwest Region MultiCare Health System.

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Officials with urban hospitals said one major burden draining their budgets is discharging patients who no longer have a medical need to stay in the hospital. UW Medicine has more than 175 of these patients in its system ready for discharge, but instead, the patients have to receive continued care at hospitals. WSHA said this is because there are 2,000 to 3,000 beds currently closed at long-term care facilities across the state.

"While they are waiting discharge, we receive little or no reimbursement for our services, despite costs of over $1,600 a day in an acute care setting," said Jacque Cabe, CFO of UW Medicine, and vice president for medical affairs at University of Washington at UW Medicine.

WSHA has proposals for legislators to help in this financial crisis. Officials said they are asking lawmakers to significantly increase Medicaid payments to hospitals by more than $1 billion per year. They also hope to see more support for long-term care facilities and staffing across the health care system.