PORT ANGELES — Olympic Medical Center’s existence as a locally controlled hospital district is threatened by the financial challenges in health care, including cuts to Medicare and Medicaid and the rising cost of treating people who can’t afford to pay their medical bills, the hospital’s chief executive said.
“Health care is local, and having a locally elected board making final decisions is a very positive thing,” OMC Chief Executive Officer Eric Lewis told commissioners in a Wednesday night briefing.
“Over the next 10 years, we face cuts in Medicare in total of $37 million in order to fund access.
“That’s going to really hurt us financially and actually threaten our very existence.”
Lewis said hospitals around the state are merging to pay the bills.
Cut spending
To stay independent, the OMC board in February approved a 2012 financial stability plan that cut $5.5 million in spending.
The plan focused on legislative advocacy for adequate reimbursement and the expansion of local services such as cardiology, neurology and sleep medicine through last year’s affiliation with Swedish Medical Center.
It did not include layoffs, outsourcing or cuts to patient services.
OMC is reimbursed 87 percent of what it costs to treat Medicare patients, who account for 57 percent of the hospital district’s business, officials said.
Medicaid covers 15 percent of OMC patients and pays the hospital just 53 percent of cost.
Lewis warned of further cuts to Medicaid and the state Basic Health and Disability Lifeline programs, which paid OMC $1.8 million in 2011.
OMC treats every patient that comes through its doors, regardless of ability to pay.
Uncompensated care
Clallam County has about 10,000 uninsured residents who can’t afford health care, Lewis said.
“Last year, we provided $9.4 million of uncompensated care,” he said.
“The big concern I have is the rate of increase of the uncompensated care, especially as times get more challenging.”
While praising the Affordable Care Act for its focus on prevention, wellness and primary care, Lewis said the federal law presents “huge challenges for OMC.”
“One of the biggest challenges is, in order to fund access, they cut Medicare,” Lewis said.
“I think advocacy is going to be a big issue going forward.”
Commissioner Jim Leskinovitch urged audience members to contact their elected representatives about protecting Medicare and state health care programs.
“We are trying as much as we can with advocacy, but we need all the people to do it,” Leskinovitch said.
Profit margin
Chief Financial Officer Julie Rukstad said OMC’s total margin was minus-1.1 percent in January and February.
The profit margin was 2.5 percent as recently as the third quarter of 2011 before falling to minus-0.3 percent in the fourth quarter.
Hospital officials said they need to maintain at least a 3 percent margin to survive over the long term.
“We have to control expenses,” Lewis said.
“Our budget is no different than anybody else’s budget,” he added.
“We have to live within our means.”
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Reporter Rob Ollikainen can be reached at 360-417-3537 or at rob.ollikainen@peninsuladailynews.com.