As a result of repeated financial concerns voiced by our members, WSHA undertook a detailed survey to better understand the financial situation for hospitals across the state. Hospitals representing 97% of all inpatient acute care beds in Washington State responded with data on their financial results in Q1 of 2022, compared to Q1 of 2021.
Our hospitals are reeling financially. In the first quarter of 2022 alone, hospitals and health systems in Washington lost nearly $1 billion, with a negative 10% operating margin. We are highly concerned about the impact these significant financial losses will have on access to health care, especially for communities that rely on a single hospital for their health care needs.
The reasons for these massive hospital losses include:
- Low reimbursement rates from government payers such as Medicare and Medicaid which use fixed reimbursement models. For urban hospitals, Medicaid reimbursement rates have not increased in more than 20 years. In Q1 of 2022, Medicaid payments for some urban hospitals covered just 42% of the costs of delivering care for patients with Medicaid.
- An increase in employee compensation of 10%, while the number of employees remained stagnant. In addition, temporary labor spending increased 200% due to the higher number of acutely-ill patients and workforce shortages.
- The continually rising number of difficult-to-discharge patients who no longer need to remain in the hospital but are unable to secure placement in nursing homes or post-acute care facilities. This creates an extremely costly situation that threatens patient access across all inpatient services.
We expect these significant financial losses to continue in the last 6 months of 2022, and for far longer if they are not addressed. Hospitals need help. We are asking the state government to act now and during the 2023 legislative session to enact solutions to this crisis:
- Currently, hospitals need the state government to help move patients ready for discharge into appropriate post-acute or long-term care settings.
- In the 2023 legislative session, we will work with legislators to increase Medicaid rates for hospitals.
- We will lobby for funding to support post-acute care providers to ensure the state’s health care system flows as it should and provides people with access to care that they need in an appropriate setting – rather than becoming stuck in hospitals without the need for specialized care provided by hospitals.
- We will look for solutions for behavioral health patients in crisis to allow intervention prior to an emergency department visit.
The stability of the hospital system is essential for a healthy, functioning Washington. Sharing the data and insight gained from this survey publicly is only one step in our continued plan to address the financial distress of our hospitals and ensure continued access to health care.
President & CEO