Hospitals keep losing money, but lawmakers may soon pass a plan to help

OLYMPIA – Hospitals are losing money – more than $2 billion a year – and lawmakers are trying to find a fix.

One idea: a plan that could help hospitals collect more Medicaid dollars.

The program would tax hospitals, which would then allow the state to receive more money through matching funds from the federal government. That extra money would go back to hospitals, which rely heavily on Medicaid patients. For every $1 hospitals are taxed, the state could get a total of $3 with the federal match.

Washington has had what’s called a hospital safety net assessment since 2010, but the current program is expiring in 2025. This new plan would replace it with a similar but bigger program that could soak up more money. Lawmakers estimate it could bring in about $1 billion for hospitals.

“We’re at an unsustainable tipping point here that we need the state to help us enact increases for our hospitals in order to continue delivering services that the public expects,” said Chelene Whiteaker, Washington State Hospital Association senior vice president for government affairs. ”That’s really what’s on the line here.”

A year-end survey from the Washington State Hospital Association shows hospital and health system lost $2.7 billion in 2022, following a loss of $742 million in 2021. The survey included all hospital systems and 98% of hospital beds across the state, according to the association.

While revenue increased by 5% over the year, operating expenses increased by 9% over the same period, likely due to high pay for employees and more expensive supplies.

In 2022, the entire MultiCare health system lost about $286 million due to inflation, higher pay for staff and longer stays for patients, spokesperson Kevin Maloney said. MultiCare’s Inland Northwest region, which includes MultiCare Deaconess Hospital, MultiCare Rockwood Clinic and MultiCare Valley Hospital, reported a $32.5 million loss.

Providence Sacred Heart Medical Center lost about $20 million in 2021, according to year-end reports from the Department of Health. Last year’s numbers are not available.

Under the new program, the state would disperse the increased Medicaid funds to hospitals, along with outpatient centers, psychiatric hospitals, rehabilitation hospitals and others. The state could also use the money to expand grants to hospitals in financial trouble.

Hospitals would likely start getting the first payments from the program in April 2024, Whiteaker told a House committee this week.

Publicly owned hospitals and those owned or operated by health maintenance organizations would be exempted.

Funding for the program has been included in both the House and Senate Democratic budget proposals.

Bill sponsor Rep. Nicole Macri, D-Seattle, said the bill will help create a safety net for hospitals that rely significantly on Medicaid patients.

“This bill will help tremendously,” she said.

Republicans also support the idea. Senate Minority Leader John Braun, R-Centralia, said he thinks the program will help close what hospitals claim is a significant gap between what it costs to care for patients and what Medicaid pays.

“It’s one that we need to keep both our large and small hospitals solvent,” he said.

In a Wednesday public hearing, some health care advocates had concerns about a lack of transparency and accountability in how hospitals could spend the money from the assessment.

Emily Brice, of the Northwest Health Law Advocates, said she supported the goal of collecting more federal dollars but said she was troubled with the lack of transparency measures in the bill.

“We need to make sure our investments are well-spent and sustainable,” she said.

House Majority Leader Joe Fitzgibbon, D-West Seattle, said the concern about health care cost transparency is one many in his caucus agree with but don’t think is a reason to not move forward with the bill.

Helping hospitals financially is one of a number of policies and funding proposals this session to address sustainability concerns from the health care system.

A number of proposals to address a health care worker shortage are still alive in the Legislature.

A bill that would require hospitals to adopt “safe staffing standards” is awaiting a vote in the House. Bills to add Washington to a multistate nurse license compact and to improve the nursing pipeline through education and outreach are awaiting votes in the House Appropriations Committee.