Washington hospitals had a better financial year in 2023 versus the year before, but not much better.
The Washington State Hospital Association reported Tuesday that, collectively, the state’s hospitals lost $1.7 billion. That’s less than the $2.1 billion they lost in 2022.
“85% of hospitals continue to lose money. These losses are unprecedented, unsustainable, and present a huge post-COVID financial challenge," said Eric Lewis, the association's CFO.
Lewis says most hospitals have had at least eight consecutive quarters of red ink.
WSHA cites several factors for the heavy losses. Among them are the low reimbursement rates that federal and state governments pay hospitals to care for poor and older patients.
“The lack of adequate reimbursement, otherwise called underpayment, creates a financial challenge for hospitals like Island Health, that are the safety net for over 40,000 people in our service area that seek care every year,” said Elise Cutter, the CEO at Island Hospital in Anacortes.
Cutter and other hospital leaders also cite higher labor costs paid to retain and recruit staff and slower-than-normal reimbursements by private insurance companies.
There’s one other factor that has roiled hospitals all over the nation. In February, hackers invaded the computers of Change Healthcare, a company many hospitals hire to help them operate their financial and information systems.
Cathy Bambrick, the administrator at Astria Toppenish Hospital in the Yakima Valley, says that forced her facility to immediately change the way it collects from patients.
“Within nine days we were manually billing for our services because that was literally all we could do," she said. "At its worst, Astria Health was $4-$4.5 million behind on its cash collections and we still have a $3.5 million shortage in collections from that time period.”
She says that's a significant stress for a hospital that lost about $8 million last year.
There are some nuggets of good news.
Eric Lewis from WSHA says while hospitals' wage and benefits costs for employees increased by $2.6 billion in 2023, their price tag for contract health care workers imported from other parts of the country fell from $1.87 million to $1.42 million.
Lewis says hospitals also brought in more COVID relief money, about $500 million, up from $318 million in 2022.
He says hospitals will likely benefit from an increase in the reimbursement rates for Medicaid patients authorized in 2023 by the state legislature. The federal government must first approve that, but the hospital association says it expects that later this spring. Then, hospitals would begin receiving higher Medicaid payments, retroactive to the start of 2024. Lewis says the increases won't cover all of the hospitals' costs of caring for Medicaid patients, but they'll receive more than they're getting now.
