Hospital financial losses continue in WA, with Astria among those feeling the strain

YAKIMA – As financial losses pile up for hospitals across the state over the first nine months of the year, services and capacity continue to be cut – including at Astria facilities in central Washington.

That was the sobering message on Tuesday as Astria President and CEO Brian Gibbons joined a Washington State Hospital Association teleconference announcing results of the organization’s third-quarter financial survey.

Facilities that operate 98% of all inpatient beds across the state participated in the survey, and overall the hospitals reported net operating losses of $1.6 billion between January and September of 2022, said Eric Lewis, WSHA’s chief financial officer.

The shortfall represents a minus 7% operating margin for 2022, and compares to $285 million in combined operating losses for the first nine months of 2021 – which was also a tough year financially for Washington’s hospitals, he said.

If the negative financial trend continues, “more than 50% of these hospitals will be out of cash by the end of 2023,” Lewis added.

Astria’s financial issues

Gibbons was among three hospital executives to join WSHA officials on the teleconference. Along with his colleagues from hospital systems in Port Angeles and Spokane, Gibbons described how traveling nurses provided by staffing companies have affected Astria hospitals in Sunnyside and Toppenish.

“We’ve really struggled to find nurses in our small communities,” Gibbons said. “Frankly, a lot of our nurses have left to become travelers, where they can make three times the salary.

“The only thing we’ve had control over was our demand for nurses, and that meant reducing capacity,” he added.

In Sunnyside, with an overall capacity of 25 beds, Astria had to pull staff from five of its 15 surgical beds and three out of its seven intensive care unit beds this year due to financial and staffing shortfalls, Gibbons said.

“That decreased our capacity by 30%,” he said.

While Astria has re-staffed enough to return the five surgical beds to service, the Sunnyside hospital remains down three ICU beds.

“We would need nine more nurses to reopen those ICU beds, and I don’t see that happening anytime soon,” Gibbons said.

Effective Friday, Dec. 16, Astria will end many cardiology services at its Lower Valley hospitals and clinics, a move Gibbons announced Nov. 29 due to financial and staffing challenges.

He said Tuesday that more services could be cut from Astria hospitals and clinics if the financial situation does not improve.

Eliminating cardiac care and other procedures hurts the community by forcing patients, the majority of whom are on Medicaid and Medicare, to travel elsewhere, Gibbons said. It also hurts day-to-day operation of the Sunnyside and Toppenish hospital.

“At Toppenish last week, we had six patients (in emergency department rooms) waiting to be transported to hospitals with a higher level of care,” he added. “We only have seven beds overall, so there was one bed available for everyone else. And our ER sees an average of 70 patients a day.”

Long-term prognosis

A zero or negative profit margin does not allow Astria or other Washington hospitals to adjust staffing to meet surges in patient numbers or needs, invest in buildings, equipment and other capital, or make payments on debt, the WSHA’s Lewis noted.

While the second and third quarters saw Washington hospitals fare slightly better than the $929 million of combined losses during the first three months of 2022, the financial crisis continues and shows no signs of getting better unless things change, Lewis said.

“The only reason you’re seeing (hospitals) close services is to protect the overall operation,” he added. “Even though most of our members are nonprofit or government-run hospitals, they still need to make a small (profit) margin to keep taking care of their patients.”

Lewis and WSHA CEO Cassie Sauer said while the huge first quarter deficit was inflated by the effects of the surge in omicron COVID cases, other issues continue to plague hospitals’ finances. These include rising labor costs, increasing prices of supplies, woefully short reimbursement for Medicaid patients and a lack of skilled nursing beds for long-term care once patients are treated at hospitals.

“Some of what we were hoping to avoid (when announcing first-quarter losses) has now come to pass. The financial problems are impacting patient care across Washington,” Sauer said.

“Access to specialized care is threatened, and services are being reduced – especially those provided by travelers,” she added. “When these resources leave a community, it’s almost impossible to get them back.”

WSHA officials hope some help might come from the state Legislature as it begins its 2023 session in January.

Chelene Whiteaker, the association’s senior vice president of government affairs, said she and other hospital leaders want lawmakers to significantly increase Medicaid reimbursement rates, invest in emergency behavioral treatment and health centers, and provide funding for long-term care facilities in need of employees.

“We need long-term care to function so patients can be discharged to the right place at the right time,” Whiteaker said. “Our state has lost up to 2,000 skilled nursing beds since the pandemic because they cannot be staffed.”

At Astria, Gibbons said he and officials are trying to renegotiate contracts with its nursing unions to keep employees on staff and reduce the need for travelers, while also working with Yakima Valley higher education institutions to begin training and recruiting new employees.

But those efforts can’t succeed if the Sunnyside and Toppenish hospitals continue to have a negative cash flow, he added.

“We are in the rural part of the (state), where these service closures are happening,” Gibbons said. “If we do not do these things, we will not be able to keep the hospitals (open).”