19 Jun After $12 million loss in first five months of the year, OMC focused on strategies to stabilize
PORT ANGELES (June 19, 2023) – With costs continuing to outpace government reimbursement and the difficulties presented by a profound healthcare workforce shortage across the state and nation, Olympic Medical Center is looking at ways to turnaround its financial picture in the coming year or two.
Through May of this year, OMC has suffered a loss of $12 million.
“Most hospitals and hospital systems are really struggling right now because of many factors largely out of our control,” says Darryl Wolfe, chief executive officer. “The costs of providing care – healthcare workers, pharmaceuticals, equipment, supplies, facility maintenance, etc. – are growing where government reimbursement through Medicare and Medicaid aren’t keeping pace.”
“Workforce shortages are also a significant issue for us,” adds Wolfe. “To maintain some very key services, we are contracting with traveling health care workers in nursing, respiratory therapy, social services, physical therapy and more. Traveler services are incredibly costly.”
OMC expects some reimbursement relief in mid-2024 when the recently revamped Safety Net Assessment Program (SNAP) in Washington State is expected to bring in approximately $10 million more per year in Medicaid reimbursement. “The increase we’ll see through the updated SNAP program is sorely needed, but until that funding starts to flow, we need to make adjustments right now to financially stabilize.”
Critical Services to Remain Intact
OMC is working through a financial turnaround process that aims to control expenses and improve productivity. Critical services, such as hospital services, are expected to be maintained at the status quo, with safety and quality a priority. OMC is currently targeting hiring efforts to fully staff patient care areas that must contract traveler services.
We can’t control our government reimbursement, we must comply with regulatory mandates, and we can’t simply raise rates, so we must do everything we can to control costs where we can. We fully believe health care is best delivered locally, and to achieve this with have to buckle down in this moment.
Phased Approach
In addition to priority hiring, the initial phase of OMC’s financial recovery plan includes tighter management of overtime and a close look at how to better manage productivity.
“After about a month of working on this initial phase, we aren’t seeing a significant financial shift and our expenses still significantly outweigh our income,” says Wolfe. “We recognize we have to more tightly manage overtime and approve overtime when it meets specific criteria such as patient safety. We also need everyone to take their scheduled breaks and adhere to punctuality at the time clock to better manage overtime.”
The upcoming phase two will involve responding to our careful assessment of productivity, and staff and patients alike will see adjustments to our operations to make sure staffing is mindful of operational needs. “To explain what maximizing productivity may look like, a possible approach is to reduce operating hours of a service that is less busy or has days that are less busy,” explains Wolfe. “We may take a service currently offered from 8 a.m. to 5:30 p.m. five days a week and change it from 7:30 a.m. to 6 p.m. four days a week if that service is traditionally slow on Fridays.”
“We know this strategy could be disruptive for employees and patients, but it allows us to utilize time more effectively and it’s an area of expense we can control. We have to try it,” adds Wolfe.
The Finish Line
What does success look like for financial recovery? Ultimately it looks like fewer contracted travelers, more employees and decreased expenses, says Wolfe. “Until our reimbursement levels improve and we have enough employees to fully open up access to largely meet the healthcare needs of our community, we need to intentionally tighten our belts to stabilize,” he says. “The board has always had a priority to ensure OMC can be financially stable and remain an independent community hospital.”
“We can’t control our government reimbursement, we must comply with regulatory mandates, and we can’t simply raise rates, so we must do everything we can to control costs where we can. We fully believe health care is best delivered locally, and to achieve this with have to buckle down in this moment.”
OMC will be providing opportunities in the coming weeks for the public to hear from Darryl Wolfe and ask questions. Follow Olympic Medical Center on Facebook or watch olympicmedical.org for more information on these events.