OMC talks finances at public forums

Government reimbursement among hospital’s challenges, officials say

Representatives of Olympic Medical Center discussed the hospital’s finances, presented a plan for recovery and answered questions from the public at forums conducted in Sequim and Port Angeles.

CEO Darryl Wolfe and commissioners Philip Giuntoli, Ann Marie Henninger and Thom Hightower participated in the forums — Tuesday in Sequim and Wednesday in Port Angeles — which drew about 20 community members each. An online-only event was held Thursday.

OMC lost $17,483,000 through the first seven months of the year, according to a financial report presented at the Aug. 16 commissioners meeting by CFO Lorraine Cannon. According to its application for a Washington State Health Care Authority distressed hospital grant, it had a net operating loss of $17,697,000 in all of 2022.

“I’m happy to show you what it costs to run a facility like this in our community,” Wolfe said.

OMC is one of two public hospital districts in Clallam County (the other is in Forks). It is governed by a seven-member elected board and is the largest employer in the county with 1650 employees. In 2022, the levy rate for OMC was $0.41 for every $1,000 of assessed property value; that year it received $4,895,000 from the levy and in revenue from timber harvests.

Wolfe said OMC needed a re-set after coming out of the COVID pandemic when it was in a constant “just get it done” mode while handling a public health emergency that put incredible demands on the hospital and its staff.

“I felt like we were in a crisis every day,” Wolfe said. “If you had to spend $10 for an N95 mask when you used to spend a dollar or pay for a traveling nurse to keep the emergency room open, you did it.”

The process of “going back to basics in management,” as Wolfe called it, began earlier this year. OMC reduced the number of expensive contract workers (such as registered nurses and physical therapists) from 78 to 47, instituted a hiring freeze on almost all non-clinical staff, and cut back on non-essential travel and overtime.

The efforts have reduced the daily rate at which it spends money by 10 percent, Wolfe said, “but it’s still not enough.”

This spring OMC hired the consulting group Advanced Operations Partners to advise it on improving its operational and cost efficiencies and assist in finding solutions to the changing landscape of health care delivery.

Central to OMC’s financial challenges, Wolfe said, was a payer mix in which 82 percent of its patients relied on some kind of government insurance program like Medicaid or Medicare whose reimbursement rates did not cover the cost of treatment. The percentage of patients who have private insurance plans, which reimburse for care at higher rates, has shrunk from around 17 percent to 14 percent.

“Every dollar we spend taking care of a Medicare patient, we get about 80 cents on the dollar [back], so that’s very challenging,”Wolfe said.

“Most of us wouldn’t want to run a business that works that way, but it’s what we need to do and we don’t turn people away as a public entity,”he added.

”We take care of every person and every setting no matter whether they can pay or not. That’s what we’re here to do, but it makes for difficult times.”

To that end, Wolfe said, OMC is looking at healthcare financial models in other states that might offer long-term solutions.

“We have to find a way to do this differently,” he said.

A member of the audience pushed back when Wolfe said OMC’s revenues would improve in 2024 and lead to some level of profitability.

“What other models are you talking about?” he asked. “Show me how we’re going to turn this around in a year.”

Wolfe said it was a “rough forecast” that would see OMC breaking even at some point, with months in which it lost money and other months in which it made a profit.

But he said that any improvements in Medicare reimbursement rates would have to come at the federal level and it was more effective to present solutions rather than simply asking for more money.

“The good news is we do have folks that care about the communities in this place,” Wolfe said. “And I think there’s some bipartisan interest in keeping rural hospitals open because they are the sole provider of health care in many communities. And there is no politics in that.”

The community could help OMC by working to address countywide housing and childcare shortages and by supporting the school systems.

“These are things that OMC can’t solve by itself,” he said.

Commissioner Thom Hightower said that OMC’s struggles were not unique when about 70 percent of hospitals in the state and about half across the country lost money in 2022.

“Each hospital has its own interesting challenges, but there is a commonality among all, that is their expenses are going up and the reimbursement is not keeping up with those expenses,” Hightower said.

Wolfe said he had heard “the craziest rumors” about OMC, like it was going to be purchased by a hedge fund or that he had walked off the job. He encouraged the audience to contact him, the commissioners or director of marketing and communications Bobby Beeman if they had questions.

“There’s all kinds of stuff going on out there and we’re in a tough spot, I’m not gonna lie to you about it, otherwise I would sit here,” he said. “But, if you hear things that don’t make sense, give us the benefit of the doubt.”

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Reporter Paula Hunt can be reached at Paula.Hunt@soundpublishing.com

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