Washington hospitals lost almost $2B in six months amidst staffing shortages

A staffing shortage is being cited as the biggest reason why hospitals across the state lost approximately $1.75 billion in the first six months of 2022.

The Washington State Hospital Association put out alarming statistics for the current year at a press briefing. While the number of hospital employees remained flat at 118,000, net operating losses were approximately $1.2 billion for the first six months of 2022, which represents a negative 8% operating loss.

For comparison, in 2021, net operating losses were $113 million.

These operating losses combined with investment losses resulted in the approximately $1.75 billion loss across hospitals in Washington, a 12 percent loss over the first six months of 2022.

“This 12 percent loss is unsustainable. We are already seeing service cuts, limits on hospital admissions and as possible without action, we could see hospital closures,” said Eric Lewis, the chief financial officer at the Washington State Hospital Association at the press briefing.

Lewis added that Washington has fewer hospital beds per capita than any other state in the country.

According to Michael Marsh, the president at Overlake Medical Center in Bellevue, there have been more people leaving the healthcare profession than entering as the demand for care remains high.

The Washington State Hospital Association previously claimed hospitals lost so much money was because of an increase in employee compensation of 10 percent, while the number of employees remained stagnant.

In 2020 and 2021, one reason hospitals did not face the financial crisis they are currently experiencing was because there were federal relief payments to hospitals. However, Lewis said the payments have ended.

The $1.75 billion in losses resulted in a significant reduction in cash positions for hospitals across the state. Out of 85 acute care hospitals in Washington, 74 have experienced negative cash flow, according to Lewis.

“More than 50% of [the acute hospitals] will be out of cash by the end of 2023 if these losses continue,” Lewis said. “What this means is that they can’t pay their suppliers, they can’t make payroll and may be filing for bankruptcy.”

The crisis that Washington hospitals are facing is said to be a result of the cost of technologies, supply chain shortages, increased number of patients and the biggest reason: staff shortages.

The Washington State Hospital Association previously released a report in July claiming that in the first quarter of 2022, hospitals and health systems in Washington lost nearly $1 billion. The organization is now saying the financial outlook for Washington hospitals is unsustainable.

“Our biggest concern here is that [the financial outlook] is putting patient care at risk in many communities across the state,” Washington State Hospital Association CEO Cassie Sauer said.