Seattle Hospital

Seattle, Washington "Emergency" sign at Seattle Children's Hospital

(The Center Square) – Hospitals in Washington are facing a perfect storm of financial challenges that threaten their ability to provide service, according to health care experts. Labor shortages, rising salaries, low reimbursement, and an insufficient number of post-acute care facilities exert enormous pressure on hospitals already struggling in the wake of providing pandemic care.

“Our hospitals are reeling financially,” Cassie Sauer, President & CEO of the Washington State Hospital Association, wrote last month. “In the first quarter of 2022 alone, hospitals and health systems in Washington lost nearly $1 billion, with a negative 10% operating margin.”

Susan Stacey, Chief Executive for Providence Inland Northwest, gave similar account. “I have been in healthcare for nearly 40 years and I have never seen a financial crisis in healthcare the way we have currently,” she told KXLY. “We are dealing with a workforce shortage and salaries, our wages are higher than ever before – like many industries. And then we also have travelers and temporary staff that are at a significantly increased cost than we’ve had.”

“For urban hospitals, Medicaid reimbursement rates have not increased in more than 20 years,” Sauer wrote. That means some urban hospitals are paid only 42% of the cost of care for Medicaid patients.

Left unchecked, the situation could seriously affect access to medical care by Washingtonians, Sauer told The Center Square. “We are already seeing a diminution of care. Wait times are increasing. Ambulances having trouble finding hospitals to take patients. Some hospitals are closing beds. There could be more,” Sauer said. “Eventually we’ll see full hospital closures. That’s the most drastic possibility.”

Elizabeth Hovde, director of the Centers for Worker Rights & Health Care at the Washington Policy Center, said Medicaid reimbursement stands out in terms of financial stressors for hospital systems.

“Poor Medicaid reimbursement is a huge reason for trouble in hospitals,” she said. “Some hospitals report Medicaid payments covered just 42 percent of costs. And with more and more Medicaid recipients, due to Medicaid expansion and able-bodied adults not needing to prove income eligibility or meet work requirements, it’s not hard to understand why Medicaid is causing hospitals so much trouble.”

Sen. John Braun, R-Centralia, agrees that the crisis must be addressed. Asked whether the state should raise the Medicaid reimbursement rate for hospitals, Braun told The Center Square, “The simple answer is yes,” but quickly added, “That’s not the only issue.”

Regarding Medicaid reimbursement, Braun said, “I think it will get strong consideration on a bipartisan basis in the upcoming session.” Just over half of Washingtonians rely on Medicaid for their health care, which makes the matter both urgent and expensive, according to Braun.

Another factor in the crisis is a statewide shortage of facilities for people who need non-acute health care, such as nursing homes and assisted living facilities.

“Just here in Spokane at Sacred Heart and Holy Family, we are close to 100 patients who are sitting in a hospital bed, who do not need hospital-level care,” said Stacey. “That’s not only not good for the healthcare system, but it’s really hard for the patient who was stuck in a hospital bed.”

That adds to the strain on hospitals, Braun said. When a hospital is not providing acute care, they either are not reimbursed for their services or are reimbursed at a lower rate, which does not take into account the higher overhead and standard of care required for a hospital.

“We expect these significant financial losses to continue in the last 6 months of 2022, and for far longer if they are not addressed,” Sauer said. “Hospitals need help.”

“It’s been pretty tough on hospitals,” Braun said. “It’s been very tough on their employees.” He is hopeful that solutions for both funding and lack of non-acute care space can be found.