PORT ANGELES — The Olympic Medical Center board of commissioners has unanimously approved a $269 million 2024 operating budget that anticipated $268 million in revenue and income, leaving a net income loss of $754,720.
Revenue included about $5 million from a board-approved tax levy increase of 1 percent, the maximum amount allowed by the state. The capital budget called for almost $12 million in spending.
Two recent events — a medical billing issue and OMC’s restructuring of one of its bonds — could have commissioners taking another look at next year’s spending, however.
Chief Financial Officer Lorraine Cannon said Nov. 15 that $2 million of a $3.4 million income loss in October was due to a coding error between OMC’s medical billing provider, Meridian, and the Centers for Medicare & Medicaid Services. OMC became aware of the issue when it began receiving an influx of bills from CMS at the end of September and beginning of October, she said.
“They were large, and we noticed there was something not right with it,” Cannon said.
Meridian had been using a CMS site neutral code for outpatient services at the Sequim walk-in clinic, rather than a hospital code, for which CMS reimburses at a much higher rate, Cannon said.
“We caught it early and we know how it happened,” Cannon said. “It is not something we did.”
Cannon said OMC had just retained an attorney with experience handling CMS billing problems to help it resolve the problem, but she did not know how long that might take.
“The question I would have if I were you is, ‘Are we going to get the money we already lost?’” Cannon said. “I don’t know. We’re taking this one step at a time.”
Cannon said should CMS continue with its site-neutral policy toward the Sequim clinic, it would have a negative impact on OMC.
“So, if there is a bigger issue behind this rather than some sort of clerical error, we’re going to have to rethink 2024 totally?” Commissioner Thom Hightower asked.
Cannon and Chief Executive Officer Darryl Wolfe both answered “yes.”
The board unanimously approved extending the tender date by three years on a $20 million bond OMC had issued in 2013. The original 10-year option was extended from Dec. 1, 2023, to Dec. 1, 2026, and the annual fixed interest rate increased from 3.87 percent to 5.17 percent.
“This takes the remaining balance of the 2013 debt, which is $14.6 million, and refinances it for three more years,” Wolfe said. “Given the interest rate environment, I’m pleased that we got this rate. And it terminates all the prepayment penalties, so in the event that we do restructure our debt, which is a goal of ours, we can get out of this without paying any penalties.”
The higher interest rate will increase OMC’s bond payment by about $130,000 a year, an amount not reflected in the 2024 budget commissioners had just passed. OMC had only learned it needed to act on restructuring the bond two days before the commissioners meeting, Wolfe explained.
“I think this is the best option for us,” Wolfe said. “It gives us three years to consider all the other options that we have in front of us.”
Wolfe reported on the Nov. 14 visit of Jonathan Blum, the Principal Deputy Administrator and Chief Operating Officer at CMS, to OMC. Blum and representatives from CMS and other agencies were on a two-day tour of the Olympic Peninsula to talk to stakeholders in rural communities about medical and healthcare delivery.
“We talked about value, we talked about being independent, we talked about finances,” Wolfe said. “It was an honest, candid discussion. I’m glad they came. I think it gave them a lot to think about.”
Wolfe said Blum spent an hour at OMC, where he met with executive staff and leaders from the North Olympic Healthcare Network, Peninsula Behavioral Health, the Lower Elwha Family Health Clinic and other agencies.
Before arriving in Port Angeles, Blum had visited Jefferson Healthcare and its dental clinic in Port Townsend and the Jamestown Family Health Clinic in Blyn.
After leaving OMC, Blum’s group traveled to Forks Community Hospital, Grays Harbor Community Hospital in Aberdeen and Summit Pacific Medical Center in Elma.
“That’s a lot of driving, and I think it was eye-opening for them,” Wolfe said. “Apparently they had to cross the Bainbridge ferry and one of the boats was down so they had to wait a long time, and there was a slide on Lake Crescent with one-way traffic, so they really got a sense of what it’s like to move around on the Olympic Peninsula.”
Commissioner Phyllis Bernard said it was important Blum and CMS staff experience first-hand the challenges of living in a rural area.
“One of the most difficult things to communicate to people within the Beltway is what distances are like here and what travel times are,” Bernard said. “No matter what they have on paper, the reality is different. Facilities have a tremendous impact on life and limb, and that’s what they needed to know.”
In other board news:
Executive Director Bruce Skinner said the Olympic Medical Center Foundation Healthcare Scholarship Fund had awarded 13 scholarships in the amount of $292,000 to OMC employees and students pursuing degrees or furthering their education in the medical and healthcare fields.
Skinner said scholarship funding is still available, so students are encouraged to apply.
Information about the scholarship program can be found at https://www.omhf.org/services-4.
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Reporter Paula Hunt can be reached at paula.hunt@peninsuladailynews.com.
