WA hospitals lose $900 million in early parts of 2022 as expenses outpace revenue
Jul 21, 2022, 3:33 PM
Urban and rural hospitals alike across Washington are in dire financial straits, according to a new survey put out by the Washington State Hospital Association.
The State Hospital Association reports that hospitals across the state had a combined net loss of more than $900 million in the first three months of the year.
The reason for this is that hospital expenses are outpacing revenue, and that’s largely due to the pandemic. Inflation has driven up the cost of drugs and other supplies.
But the biggest cost increase of all has been labor.
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Because of pandemic staffing shortages, hospitals are having to rely on traveling nurses, who are more expensive than regular staff. Additionally, because of low staffing, hospitals are having to shell out more for overtime. And to retain the staff members they do have, they’re having to raise wages.
As an example, Tom Legel, CFO of Confluence Health in Wenatchee, says they are spending 370% more on traveling nurses this year than they did last year, and 2,000% more than they did before the pandemic.
At the same time, Medicare and Medicaid reimbursements have not increased at the same rate as expenses. And hospitals are not getting the same levels of federal aid they were getting in the first two years of the pandemic, which is why things are especially bad this year.
If this keeps up, hospitals may have to resort to cutting services to get back into the black. Those services could include things like pediatrics, maternity care, behavioral health, and non-urgent surgeries.
In a worst-case scenario, hospitals may go bankrupt or even have to close. This has happened to a few already. The Legislature set aside $80 million to prevent this from happening.