Survey results released today by the Washington State Hospital Association (WSHA) show total hospital and health systems losses grew to $2.7 billion in 2022 with more than $2.1 billion in losses from operations.
WSHA surveyed all acute care hospitals in Washington to compare year-end financial results from 2022 to 2021. This survey represents all hospital systems and 98% of hospital beds across the state. Hospitals included in the survey employ more than 118,000 people. This is the fourth quarterly survey conducted by the association. Key findings include:
- While revenue increased 5% year over year, total operating expenses increased by 9% in the same period the prior year. Higher expenses were driven by significantly increasing costs for staff, energy, supplies and drugs.
- Employee compensation increased 6% in 2022 compared to the prior year while the number of hospital employees increased by 1% to over 118,000 full time equivalent
- Net operating losses were $2.1 billion in 2022, which represents a negative 7% operating loss. This follows a net operating loss of $742 million in 2021.
These losses mean many hospitals are spending down reserves that would typically be used to invest in new technology, service lines, physical plant upgrades and paying down long-term debt.
“These losses are unsustainable,” WSHA’s Chief Financial Officer Eric Lewis said. “Some hospitals are already closing beds and services as a way to preserve resources for the most critical services.”
There are several factors contributing to financial distress, including underfunding of Medicaid, higher costs for staff, supplies, and medications and patients who no longer need hospital services taking up beds without payment to cover the cost of their care.
During the briefing the association announced an agreement with the Washington state Legislature to increase Medicaid payment rates for hospitals. Large acute care hospitals have not had a Medicaid rate increase in 20 years. The association is asking that Medicaid payments be brought up to the level of Medicare, which pays about 80 percent of cost of care.
“We are grateful to the legislature for their support of the health care system, and especially for helping preserve access to critical services that are only available in hospitals,” said Chelene Whiteaker, WSHA senior vice president for Government Affairs at WSHA. “I’d like to especially thank Sen. June Robinson, Rep. Nicole Macri for their work on this issue, as well as minority leaders Sen. John Braun and Rep. J.T. Wilcox for their support.”
The expected legislation creates a new directed payment program that will allow Washington to bring in more federal matching dollars to the state’s Medicaid program. The model is used in several other states. Following approval by the Legislature, the program will need federal approval from the Centers for Medicare & Medicaid Services. If approved, the program is expected to bring an additional $1 billion in funding to hospitals through Medicaid payments.