State audit says Ritzville hospital lost $12.2 million between 2021 and 2023
The future of East Adams Rural Healthcare remains precarious, according to a state auditor’s report released this week.
Though a plan recently was approved to save the Ritzville hospital, East Adams remains at risk of closure. Former administrators allegedly kept the hospital district board in the dark about the hospital’s faltering finances for years.
The state audit found the hospital lost $12.2 million between 2021 and 2023. Losses increased over the course of those three years: $2.6 million in 2021, $3.1 million in 2022 and $6.5 million in 2023.
The three-year period also found a precipitous decline of its cash-on-hand reserves, which estimates how long a hospital can continue running without more revenue coming in. According to the audit, those reserves dropped from 189 days in 2021 to 25 days in 2023. The state audit said the reserves dropped further to 10 days in 2024 and ran out completely by July 2025.
Cause of these losses stem from a “sharp drop in patient revenues” that has persisted since the COVID-19 pandemic, according to the report. The hospital also “struggled to collect outstanding patient accounts” and received less grant money, which has historically made up a large portion of its funding.
“The district’s financial condition puts it at risk of not being able to meet obligations as they become due. It is also at risk of not being able to continue services at current levels,” the audit said.
In its response, the hospital touted its “turnaround plan,” which includes slimming down hospital inpatient care next year and putting levy increases on the ballot.
Since July, the hospital has laid off 16 employees and canceled 13 nonessential contracts, the district wrote in its response to the audit.
The state auditor also found the hospital “lacked internal controls and oversight” over its spending and employees’ use of credit cards. There were “no follow-up procedures or review” to ensure intended recipients received payment, and one employee was responsible for receiving credit card statements and making purchases.
“The district experienced significant turnover in office and finance staff, resulting in new employees who either lacked knowledge or did not follow existing processes and controls over credit cards and general disbursements,” the report reads.
In the hospital district’s response included in the audit, they write these failures stemmed from a “former CEO and a former CFO who abused their positions.”
Though they do not name the individuals, the CEO was Corey Fedie and chief financial officer was Matthew Gosman during the period reviewed by the audit.
According to the hospital, these former executives “deliberately and intentionally” withheld credit card information and expenditures from the hospital district board and other hospital staff tasked with reviewing and recording expenses.
They specifically accuse the unnamed CFO of opening a new credit card account and reactivating an inactive card without anyone’s knowledge. The CFO allegedly sent the monthly credit statement directly to himself and approved payments with the credit card.
The hospital district now requires the board to approve all CEO credit card expenditures not related to a hospital purchase and expense report, they write.