OMC loss reported at $12 million

Finance director: May loss ‘only’ $1 million

PORT ANGELES — Olympic Medical Center reports a $12 million loss through May of this year.

During an invitation-only event in Port Angeles on June 15, OMC CEO Darryl Wolfe said that the hospital had lost $7.9 million year to date. The Peninsula Daily News erroneously said that the loss covered the first four months of the year. Instead, the loss was over the first quarter.

Finance Director Lorraine Cannon said that the $7.9 million was lost between the months of January and March. Since then, the hospital suffered an additional $3.2 million loss in April and a $1 million loss in May leading to a total $12 million loss for 2023 from January through May.

“If you had told me when I started working here 22 years ago that I would be doing a happy dance that we only lost $1 million I would have called you all liars,” Cannon told OMC commissioners Wednesday night.

OMC plans to conduct events open to the public next month, according to Bobby Beeman, hospital spokesperson. Specific dates will be narrowed down after July 5.

Like many hospitals across the nation and the state OMC is finding it hard to keep up with rising healthcare costs, staffing shortages, and government reimbursement for services, Wolfe said in a press release issued Monday.

“Most hospitals and hospital systems are really struggling right now because of many factors largely out of our control,” Wolfe said.

“The costs of providing care — healthcare workers, pharmaceuticals, equipment, supplies, facility maintenance — are growing where government reimbursement through Medicare and Medicaid aren’t keeping pace,” Wolfe said in the release.

”Workforce shortages are also a significant issue for us,” he said. “To maintain some very key services, we are contracting with traveling healthcare workers in nursing, respiratory therapy, social services, physical therapy, and more services that are incredibly costly.”

Cannon said that traveler costs for the month of April cost OMC $1.2 million and $892,000 in May.

Travelers are nurses, technicians, and other medical professionals hired on 13-week contracts to fill roles that the hospital has not filled with permanent employees.

Travelers can cost up to three times the amount of a permanent employee.

In the financial report Cannon provided to the OMC commissioners Wednesday, travel staff was $407,000 above budget for the month of May but $214,000 less than the budget year to date.

Cannon also noted that locum tenens, or contracted doctors and physicians, cost the hospital $1.5 million in April and $700,000 in May.

Cannon attributed this change to the decrease of locum personnel in the emergency department staffed by Sound Physicians because it is beginning to receive payments.

“That’s pretty much Sound Physicians. They started getting some billing and started getting some cash in,” Cannon said.

The revenue for May was estimated at $45. 9 million. The actual revenue came in at $45.1 million.

Aside from spending on locums and travelers, changes in how health insurance companies reimburse hospitals have contributed to the hospital’s financial woes, Cannon said.

“We received less reimbursement because of payer mix change,” Cannon said. “In 2022 the commercial payor mix averaged 17.5 percent compared to 15.2 percent in May of this year.

The commercial payor mix is private insurance while the governmental payor mix is for things like Medicare and Medicaid.

“The change in payor mix went to other governmental payors which increased two percent in 2023 compared to 2022. This change in payor mix accounts for approximately $4 million in cash not received compared to the prior year,” Cannon said.

Cannon also said that OMC had other variables that impacted its finances, such as lower volumes of patients, increased costs in supplies and changes in prescriptions.

Though OMC has worked to decrease its need for locum and travelers, which has helped to lower costs, it will likely need to continue to rely on those services not only in the emergency department but also in its urology department.

In March, Dr. Carleen Bensen retired and Drs. Michael Ellen and Alan Kowitz picked up some of her patients. Both have said they will resign at the end of July.

Beeman said in an email that two full-time urologists are expected to join OMC staff in August 2024, with a third coming in August 2025. In the meantime, locum providers will fill in.

OMC has embarked on a three-phase mission to turn around its financial situation.

During the invite-only meeting in Port Angeles and one in Sequim the following day, and during the public commissioners’ meeting on Wednesday, Wolfe highlighted key strategies for the first phase of the turnaround.

The first thing was reducing reliance on contract labor, analyzing and restructuring current debt by talking with Key Bank, deferring on capital projects, and decreasing the subsidy for Sound Physicians in the emergency department.

“It’s going to go down rapidly as permanent providers start to come on board in July, ” Wolfe said.

Sound Physicians officially took over the staffing of the emergency department at OMC in October after being the interim provider last summer when OMC dropped its contract with Peninsula Emergency Services Inc. (PESI) which had been the hospital’s ER provider for over 20 years.

“The message I am trying to get out there is, number one, don’t panic. There’s a lot of things we’re working on here and we’re not just doing nothing,” Wolfe told OMC commissioners.

OMC commissioners on Wednesday asked Wolfe and members who attended the invite-only meetings what the public response was to those meetings.

“They were supportive, but it was invite only so there weren’t any snipers,” Commissioner Philip Giuntoli said. “I felt that some people were surprised by the detail that we did discuss regarding pay. People don’t get that — They really don’t understand the payer mix that we have in this community.”

Local government officials understand the recruitment issues, but don’t know how to fix it, he said.

Said Commissioner Ann Marie Henninger: “I think people just appreciate the information and it’s importance for our patients, employees, staff, and the community to understand what’s going on. So the more information we get before them with the details and the facts the more reassured they are, the more grateful they are for being in the loop.”

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Reporter Ken Park can be reached at kpark@peninsuladailynews.com

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