PORT ANGELES — Olympic Medical Center has had significant success over the past few years expanding its emergency room and cancer center and maintaining its level III trauma center designation from the state Department of Health, among other achievements, Commissioner John Nutter told the Port Angeles Business Association at a forum Tuesday for Clallam County Public Hospital District No. 2 candidates.
The way forward, however, is not so clear.
“I’m very proud of what we’ve been,” said Nutter, who represents District 2, Position 1. “But we find ourselves at a crossroads. There are a number of things that have happened that are a real challenge.”
Nutter and District 3, Position 2 commissioner Philip Giuntoli, who also participated Tuesday, are running unopposed on the seven-seat board in November’s general election.
Nutter is the deputy executive director of the Port of Port Angeles and a former Port Angeles police officer and director of finance at OMC; he has served on the OMC board since 2009.
Commissioners appointed Giuntoli in May 2022 to fill a vacancy left by John Miles, who died on Feb. 25, 2022.
Giuntoli is an architect with more than 50 years of experience designing healthcare facilities.
Primary among the problems OMC faces are its finances, Nutter and Giuntoli readily acknowledge. They said flat reimbursement rates for Medicare and Medicaid, combined with rising costs for labor, drugs and equipment, contributed to it losing $17 million in 2022 and the same amount over the first eight months of this year.
About 82 percent of OMC’s business comes from Medicare and Medicaid, which reimburses at a rate of about 80 percent — meaning that, for every dollar OMC spends on a patient’s care, it’s only reimbursed 80 cents.
Private or commercial insurance, which pays more than the cost of service, used to make up for low government payer rates, but decreasing numbers of privately insured patients and increasing costs make that financial model no longer sustainable.
“What we’ve seen is a transition where that commercially insured group has gone down,” Nutter said. “It went from 17 to 18 percent of our business and now it’s down to 14 percent, whereas our government payers are now up to 82 percent.
“Medicare used to be anywhere from 54 to 56 percent of our business and we’re now up at 62 to 64 percent,” Nutter said. “That’s a money loser. Every patient we see, we lose money on it, and we’re seeing more and more in that area.”
Nutter said the board is looking at a number of different strategies to contain costs and increase revenues.
“There is no single lever to go pull; there is no single thing to go do,” Nutter said. “It’s going to take a combination of a lot of things and I don’t know how that’s all going to play out in the right now.”
Giuntoli said OMC had instituted a hiring freeze on almost all non-clinical staff, eliminated all unauthorized overtime and reduced the number of contract workers by about 40 percent.
Giuntoli said the board had also this year changed the way it operated so it could monitor more closely OMC’s financial situation.
“We used to get financial reports on a quarterly basis, but after the first quarter, we said, ‘No, this isn’t good enough,’ and we’re now getting those reports three weeks into the month,” Giuntoli said.
“The last time we had the report, we had reduced expenses by $1.8 million. Unfortunately, we still lost [money]. So we’re still trying to address this.”
OMC is not alone in facing financial difficulties. About 70 percent of Washington hospitals and 60 percent of those nationwide are losing money, Nutter and Giuntoli said. Rural hospitals are particularly at risk.
“I think what we’re going to see longer term is rural hospitals closing their doors, and that’s communities that aren’t getting health care,” Nutter said. “It’s going to be a very ugly situation. Fortunately, we’re not very close to that and our role as a board is to make sure we are making those decisions to keep our doors open as much as we can.”
Among the questions regarding OMC’s finances was the potential cost of litigation involving Josiah Hill, a doctor employed by the hospital’s former emergency room physician provider who was accused in 2022 of assaulting patients. His case is scheduled to go to trial in January 2024.
“Even though he wasn’t our employee, because it happened in our facility, we will still get held liable to some extent,” Nutter said.
“I can tell you in our financials last year, we put $2.5 million aside, saying we think that’s our legal liability for the situation because it happened under our roof.”
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Reporter Paula Hunt can be reached at paula.hunt@soundpublishing.com.
