PORT ANGELES — Olympic Medical Center officials reported decreasing costs for locums and travelers as more permanent providers join the Emergency Department along with new cost-saving measures such as cutting back on travel expenses and office supplies.
CEO Darryl Wolfe outlined cost-saving measures in an email sent to OMC employees on Friday while also saying that the hospital plans to “partner with external resources to perform an assessment of OMC data which will determine key drivers of the hospital’s profitability, focusing in particular on its revenues and expenditures.”
“This will help determine additional adjustments needed to maximize productivity and increase revenue,” Wolfe said.
An explanation of plans to work with an outside firm were not provided when requested on Friday.
This is the beginning of Phase II in a plan to address a $12-million-loss through the first quarter of this year.
OMC Finance Director Lorraine Cannon announced the beginning of Phase II to commissioners on Wednesday. She said that new cost-saving measures have been put into effect to aid in the financial recovery.
These new cost-saving measures are that all travel, such as for conferences, conventions, and the like have been canceled
A hiring freeze has been placed on all non-clinical positions such as receptions, technicians, and human resources.
No new capital purchases and no new office supply purchases.
“Basically if it’s not broken, don’t ask for it,” Cannon said. “I know it’s silly but how many of us have a closet full of nothing but unused office supplies?”
In June, OMC began Phase I with cost-saving measures emphasizing reducing the hospital’s reliance on contract labor such as locums tenens and traveling staff.
It is now down to 55 travelers from a record high of 78.
Other measures: Making corrections to salaried staff’s Personal Time Off (PTO), ensuring that those employees use their PTO as well as making corrections to 340B ( Drug pricing) data; reductions in overtime, telling employees to go home at the end of their shifts; and decreasing subsidies for MedStream ( anesthesia group) and Sound Physicians ( Emergency Department service provider).
At the time, Wolfe noted that like many hospitals across the country, OMC was struggling with rising healthcare costs, smaller government reimbursements and severe staffing shortages.
“To maintain some very key services, we are contracting with traveling healthcare workers in nursing, respiratory therapy, social services, physical therapy, and more services that are incredibly costly,” Wolf said.
Locums tenens, contracted doctors and physicians in the Emergency Department, and the hospital’s new anesthesia group re costly, officials have said.
On Wednesday, Cannon said that those costs are going down due to permanent physicians coming on board and some traveling staff becoming permanent staff.
In the first quarter of 2023, travelers were costing OMC $5.7 million which dropped to $5.2 million in the second quarter.
Heather Delplain, OMC Human Resources director, said that at least seven travelers were hired for permanent positions, likely contributing to the cost going down.
The cost for locums also went down from $3.9 million in the first quarter to $3.6 million in the second quarter. Cannon attributed this decrease in cost to the Emergency Department provider group, Sound Physicians, hiring six new permanent physicians and three assistant practitioners.
“We are moving in the right direction,” Cannon said.
Emergency Department Director Aaron Possin provided a review of how the Emergency Department has improved since Sound Physicians took over in July.
“When we first took over in the ED it was entirely run by locums providers,” Possin said.
“Our first permanent ED provider, Fred Barton ANRP came on in April and he’s just been incredible, then this month we welcomed Dr. Christine Davis and Ken Wallenfelz, ANRP,” Possin said.
In August, the OMC Emergency Department will bring on Dr. Joseph Chang as the department’s medical director as well Dr. Bryan Bennett and Dr.Jamie Zink.
More doctors will join the department in the fall and winter, officials said.
Despite these improvements, OMC still has a large hole to climb out of and the revenue side is not keeping up with the expenditure side.
OMC’s payor mix — how insurance companies pay the hospital — is majority government insurance like Medicaid and Medicare which do not pay enough to cover hospital expenses, officials said.
Additionally, not enough OMC patients have private insurance (such as Premera, Blue Cross Blue Shield or Molina), which pay more, to cover the difference.
“We really can’t control our revenue to speak of, regardless of what we change,” said John Nutter. OMC commissioner.
”We have a free economy on the expenditure side where we have to pay whatever the market rate is for labor, supplies, etc.,” Nutter said.
“So we have this terrible imbalance of a command economy on the revenue side and a free economy on the expense side,” he added.
”We could focus on the revenue side if we want to, but that’s saying we’re going to change Olympia or Washington, D.C. and those odds are slim,” Nutter said.
Cannon said she believed there were things that could be done on the revenue side but they would not make the huge impact OMC officials seek.
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Reporter Ken Park can be reached at kpark@peninsuladailynews.com
