WA hospitals lost more than $2.1 billion in 2022, officials say
Staff turnover and the use of traveling employees to fill the resulting open positions were among the expenses causing the state of Washington’s hospitals to lose more than $2.1 billion during the past year.
Among the organizations facing revenue losses and staffing woes was MultiCare, the Tacoma-based nonprofit health care group which owns 12 hospitals across Washington, including recently-acquired MultiCare Yakima Memorial Hospital.
MultiCare CEO Bill Robertson joined a Washington State Hospital Association teleconference on Tuesday to review the organization’s financial survey of hospitals in 2022.
Facilities that operate 98% of all inpatient beds across the state participated in the survey, and those hospitals reported net operating losses of $2.1 billion, said Eric Lewis, WSHA’s chief financial officer.
The amount of losses is roughly triple the $742 million the state’s hospitals lost in 2021, Lewis reported.
“2021 was a pretty rough year for hospital (finances), so the fact that 2022 was worse is quite alarming,” WSHA CEO Cassie Sauer said. “These large losses are putting patient care at risk at many hospitals across the state.”
While total operating revenues increased 5%, from $29.2 billion to $30.7 billion, Washington hospitals saw total operating expenses increase 9% in 2022, from just under $30 billion to $32.8 billion. This produced an operating margin of minus 7%, more than twice the minus 3% margin in 2021, Lewis reported.
The survey showed both employee wages and benefits and supplies, drugs and other purchases increased 6% between 2021 and 2022. By far the largest expense increase was the cost of travelers – nurses or other medical personnel who are provided by staffing agencies to fill vacancies at hospitals. This cost increased 120%, from $858 million in 2021 to $1.89 billion in 2022.
Lewis said 81 Washington hospitals participated in the financial survey, and 69 of them lost money in 2022. Of the 12 who did not, 11 of them were rural, critical access hospitals which receive more favorable Medicaid reimbursement than urban hospitals.
MultiCare’s issues
Robertson, the CEO at MultiCare, said all of his organization’s hospitals lost money in 2022, with an aggregate loss of $286 million during the year. This does not include the Yakima hospital, whose acquisition was finalized in January.
He echoed the comments of WSHA officials who bemoaned the Medicaid reimbursement rate for urban hospitals, which has not increased in 20 years.
The fact that Medicaid has not increased in two decades while costs of labor, equipment and supplies have increased dramatically during that time frame hurts health care across the state, Robertson said. As an example, he cited a 17% increase in purchasing costs at MultiCare hospitals over the past three years due to inflation.
Robertson also addressed how his organization has boosted wages and benefits in an effort to retain nurses and other hospital personnel, and has entered partnerships with educators at both the high school and university levels to increase interest and recruitment of new employees.
MultiCare has programs at Tacoma high schools for students interested in nursing, and has instituted a nurse residency program similar to what new physicians go through.
“We have about 600 nurses each year who have just come out of their education (programs) who are part of our six to 12-month nurse residency program, depending on their job,” Robertson added.
The hospital group also has partnerships such as its collaboration with Pacific Northwest University of Health Sciences in Terrace Heights. MultiCare made an $8 million pledge to the university two years ago to increase the availability of health care professionals at medically underserved communities throughout Washington.
Other hospitals’ staffing woes
Two other hospital administrators on Tuesday’s WSHA teleconference noted the effects of staffing shortages at their hospitals, and efforts to address the issue.
Dori Unterseher, nursing supervisor at Harborview Regional Health, noted that her Aberdeen community hospital closed its surgical unit in August 2020 due to the COVID pandemic, which forced the postponement of elective surgeries and other procedures. It has not been able to reopen due to labor shortages.
Unterseher said the employee turnover rate for her entire hospital increased from roughly 20% to 28.3% by the end of 2021. Many of these vacancies were in nursing, prompting the use of travelers. At the end of 2019, the hospital had two traveling nurses on its staff, a number that increased to 34 by the end of 2021 and 42 by the end of 2022.
“Believe me, I’m grateful for them – we couldn’t do what we do at the hospital without them,” she added. “But they come with a high cost, and we can’t sustain those costs.”
Heidi Anderson, CEO of Forks Community Hospital, experienced a similar surge in numbers and costs of traveling staff.
“Before the pandemic, I could count on one hand the number of travelers we have had in 23 years,” Anderson said.
Unterseher and Anderson both said they work with their local community colleges, Gray Harbor College and Peninsula College, to collaborate on nursing residency programs.
“The biggest constraint for us is the number of students the college can take, due to the number of faculty,” Unterseher said, saying about 35 nursing students can enroll in the Gray Harbor nursing program each year.
Anderson said interest in nursing appears to be declining at Peninsula College. After years of roughly 200 applicants for the 32 spots in the program, last year had only 39 applicants.
“That tells us the pipeline is starting to dry out,” she added.