Contact: Beth Zborowski
SEATTLE ꟷ Results of the most recent financial survey of Washington’s hospitals shows operating losses of nearly $750 million. These losses represent a -4.6% operating margin.
The Washington State Hospital Association surveyed all acute care hospitals in Washington for their calendar year financial results during the first 6 months of 2022 compared to the first six months of 2023. Survey results included about 93% of acute care hospital beds across the state. In 2022, operating losses were $2.1 billion. In the first half of 2023, the pace of losses slowed, but remained significant.
“Hospitals are critical community infrastructure. Washingtonians rely on hospitals to be there to care for heart attacks, strokes, trauma, appendicitis, cancer, and other emergency and acute needs. On-going financial losses are unstainable and over time they will result in hospitals reducing high cost services in an effort to simply keep the doors open.”
Several factors contributed to the lessening of the total losses, including cuts in services, reductions in the use of traveler/temporary staff, and increased revenue primarily due to more patients receiving care such as surgeries, and improvement in investment income.
When non-operating revenue is included, statewide total losses dropped to -$159 million or a -1% margin. Non-operating revenue includes investment income and some funds that supported the covid response, including FEMA funding.
“Investment income is not reliable and it is critical that operating margins are positive for long-term sustainability of hospitals in our state,” said Eric Lewis, WSHA’s Chief Financial Officer. “85% of the organizations responding to our survey had a negative margin. This level of losses is unprecedented.”
Driving the losses are an overall increase in expenses of 10% year over year, including for supplies, equipment, medication, and labor expenses.
When comparing the first six months of 2023 to the first six months of 2022, employee compensation increased by an average of 8% per employee. While the cost of agency staff has declined by $300 million, hospitals increased wages and benefits to employees by $700 million and slightly increased the number of employed staff over the first six months in 2023. This is expected to exceed $1.4 billion over the year, with many contracts still in negotiation.
Full results of the survey, along with impacts to services and potential solutions were presented during a virtual media briefing. A recording of the briefing is available online: WSHA Press Briefing – Oct 11, 2023 and a summary of the results are included below.
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