Consultant says report shows path for OMC, UW Medicine

Published 1:30 am Saturday, June 20, 2026

PORT ANGELES — The Olympic Medical Center board learned the results of a financial and operational assessment that UW Medicine required as a condition of moving forward with a potential partnership between the two health systems.

The assessment, conducted by consulting firm Kaufman Hall, identified nearly $30 million in projected annual operating improvements and $55 million the hospital could raise, largely from the potential sale or leaseback of four hospital-owned properties.

John Bauerlein, managing director at Kaufman Hall who presented the findings, told the board Wednesday night the report “identifies a path forward of sustainability and promise for Olympic Medical Center.”

Kaufman Hall recommended a range of operational changes — from improving access and negotiating better supply deals to fixing billing processes and making sure staffing levels match patient volume.

According to the assessment, OMC is using only 68 percent of its available appointment slots, well below the 85 percent that other health systems achieve. Filling that gap would mean roughly 37,000 more patient visits a year and between $2.5 million and $5.5 million in additional revenue — plus more money as those patients use other OMC services.

Bauerlein cautioned that the projections do not account for potential cuts to Medicaid and Medicare or rising costs, and the projected gains would take about 21 months to be fully realized.

Other recommendations were to hire a firm specializing in 340B requalification, noting that a partnership with UW Medicine also could help restore eligibility.

OMC lost its 340B status last October, cutting off access to a federal program that allows hospitals serving low-income patients to buy drugs at reduced prices. Regaining it could generate between $500,000 and $1 million annually, the report said.

Board President Phil Giuntoli said he spoke with UW Medicine on Tuesday.

“They shared that they found the report helpful to them for development of a proposed affiliation agreement with Olympic Medical Center in the coming weeks,” he said.

UW Medicine agreed to pay $200,000 of the $425,000 cost for the assessment, which was stipulated under a nonbinding letter of intent the two systems signed on Sept. 3, 2025.

The deadline to finalize the agreement has been extended twice, most recently to Aug. 31.

Clinic visits

In his financial report to the board, interim CFO Dennis Stillman said clinic visits dropped 20 percent between March and May, a decline he attributed to staff turnover and providers taking vacation. Lab work, imaging and surgery held relatively steady over the same period, suggesting patients were still getting care even as clinic visits fell.

Emergency room visits climbed to an average of 83 per day, up from 76 last September, with some days topping 100.

During public comment, orthopedic surgeon Dirk Gouge warned the board that access problems are mounting.

“Our numbers and our production are going to look a lot worse soon,” he said.

Gouge said his schedule is running at 115 to 120 percent capacity — meaning he is regularly double-booking and adding patients. His next available appointment is not until Aug. 16; the physician’s assistant with whom he works is booked until September.

At the same time, Gouge said his wait list for joint replacements, which for most of his career has hovered around three months, is now down to five weeks because patients are going elsewhere for treatment — not because demand has dropped.

Gouge said interim CEO Mark Gregson’s approach of cutting staff and payroll “is a private equity model” and cited studies showing it “has proven dangerous to quality of patient care, decreases patient access and worsens safety and increases mortality.”

In a separate interview, Gouge disputed some of the Kaufman Hall data, saying the conclusion that OMC has room to see more patients is based on appointments — not actual patient visits.

The report’s data drew scrutiny at the meeting as well. Commissioner Thom Hightower told Bauerlein that the report showed a 3 percent commercial payer mix, saying OMC has historically been closer to 15 percent. Bauerlein did not have an immediate answer.

“Those kind of mistakes makes me really question the whole report,” Gouge said.

Gregson told the board Wednesday that a physician contract structure had been prepared and was being reviewed by physician leaders. But Gouge said physicians have not seen a contract and have been working without one for six months.

Physician contracts typically are negotiated in the fall and signed by Jan. 1. Gouge said one of the first things Gregson did after he arrived last August was to disband the compensation committee that handled contract negotiations, and that, in March, he canceled all further meetings of the Olympic Medical Physicians council, which had provided representation across specialties.

“We’ve had no conversations other than, ‘Yes, we’re working on a contract,’” Gouge said.

The next board meeting will be at 6 p.m. July 15 in Sequim. There will not be a meeting on July 1 because a quorum of commissioners will not be present.

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Reporter Paula Hunt can be reached by email at paula.hunt@peninsuladailynews.com.