PORT ANGELES — Olympic Medical Center is projected to operate at a $6.4 million loss in 2025 while seeking price increases as it faces increasing across-the-board expenses.
Chief Financial Officer Lorraine Cannon presented a draft of the hospital’s 2025 $304.2 million budget to OMC commissioners at a public hearing Wednesday.
OMC had $28 million in losses in 2023.
The budget forecasts a 6.25 percent increase over 2024 in the total number of inpatient, outpatient and clinic patients receiving services. Price increases for those services will generate about 10 percent more gross revenue than in 2024.
Operating revenues also will get a bump from the levy lid lift voters approved in August, but OMC has not yet heard from Clallam County the specific amount it will receive.
Reimbursements from Medicare and Medicaid will increase slightly in 2025, Cannon said, although that will not make up for the fact that they still pay less than the cost of care.
With 85 percent of OMC’s payer mix made up of government plans and commercial insurance accounting for only 14 percent, OMC will continue to struggle to generate revenue, CEO Darryl Wolfe said.
“We’re going to continue to focus on federal advocacy,” Wolfe said about OMC’s efforts to stabilize its financial position next year. “We need to improve our Medicare reimbursement.”
Cannon attributed the 12 percent increase in expenses over 2024 to what she called “tailwinds” — a new collective bargaining agreement; increases in employee salaries and benefits; repairs and maintenance; equipment purchases; and professional fees.
As part of its belt-tightening, its capital expenses of $9.7 million will be $2 million less than last year.
OMC will continue in 2025 the cost-savings efforts like reducing contract labor and capturing revenue by increasing efficiencies in medical coding and documentation that already has saved it $5 million this year, Wolfe said.
He added that hospitals across the state, including OMC, are operating on negative margins as they continue to recover from the COVID-19 pandemic and associated staffing shortages, increased expenses and higher employee costs, as well as the inadequate reimbursements from government payers.
While revenues have increased, he said, they are being outpaced by expenses.
In the six months ending June 2024, acute care hospitals in the state lost a combined $305 million and had an average operating margin of minus-1.7 percent.
OMC’s 2024 third-quarter operating margin of minus-1.6 percent aligned with the state average, but it’s a dramatic improvement over the third quarter of 2023, when it was minus-9 percent.
Cannon pointed out another positive sign in her September financial report.
“It is a loss of $1.1 million for the [third] quarter; it is the lowest loss in the quarter in over a year,” she said.
During the third quarter, OMC’s days of cash on hand dropped in half — from 57 a year ago to 28. A bond agreement with one of its creditors requires a 60-day cash-on-hand threshold; it granted OMC a waiver so the hospital would not default.
Commissioners are expected to approved the 2025 budget at their next meeting at 6 p.m. Nov. 20. The budget can be found at tinyurl.com/2p9v5w22.
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Reporter Paula Hunt can be reached by email at paula.hunt@peninsuladailynews.com.
