WA hospitals operating at a loss, official calls situation ‘unsustainable’

Mar 22, 2023, 9:42 AM | Updated: 2:12 pm

Hospitals losses...

Hospitals in Washington state are operating at a loss. (Getty Images)

(Getty Images)

Washington hospitals are operating at a loss, and it could impact patient services.

“Hospitals in Washington State are facing an unsustainable financial situation,” Washington State Hospital Association CEO Cassie Sauer said. “Financial losses that our hospitals are experiencing continue to be enormous. Revenues simply are not keeping up with rapidly escalating costs.”

WSHA put together an income statement that showed that the state’s hospitals have been operating at a loss for the past two years.

Financial losses are totaling billions of dollars for the past two years.

“I always want to remind people that 2021 was not a great year,” Sauer said. “If you look back in your memory, it was a pretty rough year for healthcare, so the fact that 2022 is worse is quite alarming.”

WSHA is pushing for higher Medicaid reimbursements. After years of struggling with COVID-19 and overcrowding, state hospitals are “dealing with low Medicaid reimbursement, labor shortages, patient costs higher than reimbursement, and high inflation,” WSHA chief financial officer Eric Lewis outlined. He said that a 12% loss is “unsustainable,” and at that rate, 50% of hospitals will be out of cash by the end of 2023.

The figures are part of the hospital financial survey released at the end of 2022. Lewis said 74 of the 85 hospitals in the survey are experiencing negative cash flow.

Hospitals saw a loss of more than $2.7 billion in 2022, compared with a $1.2 billion loss in 2021. Operating income is revenue less any operating expenses.

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Higher operating costs were fueled in part by a 120% rise in temporary labor spending, a 6% rise in employee wages and benefits, and a 6% increase in costs of medication, supplies, and other expenses, according to the WSHA income sheet.

“We’re very concerned that access to this specialized care, the highest level of care, and in many cases, the life-saving care is threatened by unsustainable financial losses as hospitals are resorting to extraordinary means to close the gaps in their budgets,” Sauer said in a briefing on Tuesday as reported by The News Tribune.

Similar warnings were issued by WSHA last year as federal pandemic aid ended while other costs went up.

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WA hospitals operating at a loss, official calls situation ‘unsustainable’