Washington hospitals grappling with financial crisis, job cuts

Hospitals across Washington state are grappling with a financial crisis that is already leading to job losses.

The federal government, which typically increases Medicaid reimbursements annually, did not approve an increase for 2025. Cassie Sauer, CEO of the Washington State Hospital Association, said Medicaid payments are now lower than they were in 2024, leaving hospitals unable to cover operating expenses.

“If they don’t have the cash flow to cover their operating expenses, they are going to have to make cuts and layoffs,” Sauer said.

Valley Medical Center in Renton has already confirmed to The Renton Reporter layoffs of more than 100 workers. Sauer expressed concern that the Biden administration did not pass the increase and fears the Trump administration may lack the political will to approve it.

“This is a program that is in jeopardy,” Sauer said, citing discussions about Medicaid cuts and reductions in the Medicaid budget.

Sauer noted that current reimbursement rates are so low that hospitals are paid only half of what it costs to care for Medicaid patients. She warned that hospitals across the state could lose a total of $1 billion, putting essential services at risk.

“What the hospital will do will be to close a whole service—like they’ll close labor and delivery, or they’ll close the mental health units, they’ll close their physical therapy department. That service is then gone for the entire community, not just for people on Medicaid,” Sauer said.

The financial strain is compounded by rising costs for staff, supplies, energy, and pharmaceuticals, while payments to hospitals remain stagnant. Sauer also criticized the Washington state legislature for proposing cuts to hospitals and new taxes on them, adding to the pressure on healthcare providers.

The crisis, Sauer emphasized, will affect all residents of Washington, not just those on Medicaid.

Heather Bosch is an award-winning journalist for KIRO Newsradio