70% of hospitals and healthcare systems in Washington operate at a loss, accumulating $4.9 billion in losses over the past four years. Although deficits in 2024 slowed compared to previous years, they remain significant.
WSHA’s latest survey of member hospitals revealed the financial struggles of providers across Washington. Chronic underpayments from Medicare and Medicaid, rising operational costs and declining cash on hand are all eroding hospital bottom lines. Despite some financial stabilization in 2024, threats to Medicaid funding at the state and federal levels could send hospitals — especially those in rural areas — back into financial crisis. And there is still a long way to go to recover from the $4.5 billion in operating losses sustained over the last four years.
Beyond reimbursement shortfalls, hospitals are battling rising costs for labor, supplies and equipment.
At the same time, inflation, workforce shortages and high patient volumes continue to pressure hospital finances. Even hospitals that have implemented cost-cutting measures are struggling to balance their budgets.
Seven out of ten hospital patients in Washington are insured through Medicare or Medicaid, which reimburse hospitals at rates far below the actual cost of care.
While recent increases in Medicaid payments have provided some relief, these payments still only cover about 85% of hospital costs. Federal and state policy changes threaten to cut those potential Medicaid reimbursement even further.
Where the money goes
What are Washington hospital expenses?
Washington hospitals employ 120,000 workers
Source: WSHA 2023 financial survey representing 96% of licensed beds. 2023 DOH End of Year Reports indicate depreciation, supplies, purchased services and other expenses accounts for 45-46% of total operating expenses.
The current state of cash reserves
Washington hospitals’/health systems’ days cash on hand decreasing1
For a healthy body rating, hospitals should have at least 200 days cash on hand
Hospitals need reserves to allow them to invest new equipment and services, to secure financing for these purchases and for building projects to meet growing community needs, and to weather unexpected challenges like cyber-attacks, natural disasters, and pandemics.
The reserves our hospitals built prior to 2020 allowed them to sustain care during the pandemic and its aftermath, including absorbing increasing costs.