PORT ANGELES — Rising costs, decreasing revenue and high personnel costs at Olympic Medical Center mean there is only one place left to cut — employee benefits, Eric Lewis, CEO of the facility, said during his first State of the Hospital speech last week.
“We need to live within our means,” Lewis told hospital commissioners Thursday.
To do that, the hospital needs to bring employee benefits closer to the market, he said.
“No one pays us more because we pay more in benefits,” he said.
The hospital administration and medical workers’ union are in negotiations, Lewis said.
Their proposals are far apart, and negotiators are not getting any closer to an agreement, he added.
The hospital wants to increase the employees’ share of their health care coverage and cut the hospital’s contribution to employee retirement from 10 percent to the industry standard of 7 percent, he said.
No subcontracting is planned, Lewis said in a memo to employees emailed Monday.
“The article in yesterday’s Peninsula Daily News incorrectly stated that OMC wants to ‘subcontract some services,'” Lewis wrote.
“I want to clarify that the opposite is true, as OMC has no current plans to subcontract services. Our goal is to retain our work force.
“Proposed cuts to Medicare and Medicaid reimbursements are causing us to closely examine our budget. We are in contact with our federal elected officials as the deficit/debt ceiling discussions include significant cuts to Medicare and Medicaid funding over the next 10 years. We are working to minimize these cuts to rural hospitals such as OMC.”
Eight employees, many with young children in tow, pleaded with commissioners to intervene in the hospital administration’s proposal to raise the cost of health care for health care workers.
“In the critical-care unit, we’re exposed to staph infections, MRSA and Hep C every day,” said Gina Hutton, a nurse who introduced her two young children to the board.
“I’m the one who delivers the care, then I go home to my children to make them dinner,” Hutton said.
Under the hospital administration’s proposal, Lewis said, single employees would see no change; medical insurance would remain free for them.
Employees with children would pay $94.39 per month, while an employee whose spouse also is covered would see a monthly increase of $18 and an employee covering a family would see a $112 monthly increase.
Balancing the budget
The medical center’s operating margin has been reduced from 10 percent in 2001 to the current 1.6 percent, Lewis said.
Operating margin is the “profit” that nonprofit organizations like OMC earn to fund capital facilities and upgrade equipment, as well as being a key indicator of long-term health.
The hospital can’t afford to break even because the “profits” are used for capital projects, to pay off loans incurred for earlier projects, to invest in new services and to keep a rainy-day fund for emergencies, Lewis said.
Recent projects have included the replacement of aging cancer treatment equipment and old hospital signs, which was required to reduce confusion and to bring the hospital into compliance with the Americans with Disabilities Act.
The hospital is receiving less per patient from government agencies, and private insurance is increasingly more expensive than many people can afford, costing from $1,000 to $1,500 per month, Lewis said.
Many who cannot afford insurance are waiting until their illnesses are critical, then going to the hospital’s emergency room, he said.
Six percent of the patients OMC sees cannot afford the price of their care, leaving the hospital with debts that often go unpaid.
The care of nearly three-quarters of patients seen at the hospital, 72 percent, is paid by state or federal medical programs, he said.
Many of those programs have been cut back, which will further reduce the hospital’s revenue in coming years.
Employee benefits
The only thing remaining is employee benefits, Lewis said.
OMC has the highest personnel costs of all hospitals in a study of Northwestern Washington hospitals — 60 percent of the hospital’s total expenses are in wages and benefits, Lewis said.
Cutting those expenses is the only thing left to do, he said.
Health care workers are severely overworked, with high patient-to-nurse ratios that are endangering the lives and safety of patients, health care workers said.
“Cut the new signs, more buildings and new furniture,” Hutton said.
Basic patient care is more important than the newest equipment, she said.
“We work in health care. We need OMC to be a better partner,” she said.
Subcontracting, lower benefits and higher-stress jobs discourage people from entering the industry, heath care workers told the board.
“To subcontract is to endanger continuity of care and retention of employees,” said Tom Huber, a registered nurse.
The average age of a registered nurse is 52, said Jennifer Groves, a health care worker who spoke at the meeting.
In the near future, many will be retiring, leaving a large hole in health care, she said.
Many want to become nurses, but for many, there is not enough money to do it.
“We are OMC’s most valuable resource,” Groves said.
“It’s time to invest in us.”
________
Reporter Arwyn Rice can be reached at 360-417-3535 or at arwyn.rice@peninsuladailynews.com.
