This week, WSHA released complete results from our 2023 financial survey of Washington State hospitals. The survey showed hospitals across the state sustained $1.74 billion in operating losses over the course of the year. Wages and benefits continue to make up the largest expense for hospitals, with wages and benefits increasing nearly 16% between 2022 and 2023, as hospitals are employing more professionals and increasing salaries. See the full results here.
However, the losses in 2023 were not as extensive as in 2022, when hospitals sustained more than $2.1 billion in operating losses. Investments, COVID relief (which is all spent now) and funding from the Federal Emergency Management Agency (FEMA) helped offset losses in 2023, keeping overall margins to -1%. Overall margins in 2022 were -9%.
Hospitals are still suffering unsustainable losses. Though this year wasn’t as devastating as 2022, hospitals have very little left in reserve to counteract the continuing losses without cutting services. Eighty-five percent of our state’s hospitals are continuing to lose money, and these losses have continued over an unprecedented eight-straight quarters.
Our members should experience some relief with the enactment of the Safety Net Assessment Program, which provides Medicaid reimbursement rate hikes retroactive to the start of 2024, but that money has yet to come through as CMS approval is pending.
When finances get tough, hospitals, like organizations in any other industry, have to find a way to lower expenses to keep their doors open. What makes hospitals different is that people’s lives depend on them. Harmful regulations can make the environment even tougher. Restrictions on the ability to collect facility fees in off-campus, outpatient facilities takes away much-needed funding to maintain services. Restrictions on the ability of hospitals to merge and affiliate can result in closures, which is in nobody’s best interest. The backlog of patients waiting for placement in post-acute settings and the recent cyberattack has only compounded to make the situation worse.
We all want to reduce health care spending, but the reality is hospitals are just one part of a larger health care industry, and they are still financially vulnerable. We will continue to work with lawmakers and state agencies on strategies that will provide some relief: addressing complex discharge patients, supporting hospital staffing law implementation, advocating for better government reimbursement, opposing harmful regulations and supporting alternative care sites for health concerns that don’t necessarily require a hospital level of care.
Sincerely,
Eric Lewis
WSHA Chief Financial Officer
ericl@wsha.org
