Hospitals facing fiscal hurdles, Olympic Medical Center CEO says

By Rob Ollikainen
Peninsula Daily News

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PORT ANGELES — Olympic Medical Center's top executive called on business leaders and the public Monday to help secure political support for large rural hospital systems like OMC.

Chief Executive Officer Eric Lewis made a pitch for legislative advocacy during a wide-ranging presentation at Monday's Port Angeles Regional Chamber of Commerce luncheon.

“Really, our message to our elected officials in Washington, D.C., is: please stop cutting,” Lewis told an audience of more than 50 at the Port Angeles Red Lion Hotel.

“Every time they cut Medicare reimbursement, my hair turns more gray. I used to have brown hair.”

Federal sequestration will result in a 2 percent cut to Medicare reimbursements beginning April 1, resulting in a loss of about $100,000 per month to OMC, he said.

The public hospital district that includes Port Angeles and Sequim currently is paid about 85 percent of what it costs to treat Medicare patients.

“Even more challenging is Medicaid reimbursement,” Lewis said.

OMC is paid just 58 percent of cost for outpatient Medicaid services.

With 80 beds at its flagship hospital in Port Angeles, OMC is one of four community hospitals in the state that face a particular challenge.

Isolated rural hospitals with more than 25 beds are paid a fixed amount, while critical-access hospitals with 25 beds or fewer — including Forks Community Hospital and Jefferson Healthcare — are paid 101 percent of what it costs to treat patients on government insurance.

“In some ways, we're the canary in the coal mine on the way Medicare and Medicaid are reimbursed,” Lewis said.

“It's very challenging. . . . But we did talk to our elected officials, and they've agreed to sponsor a bill.”

State Rep. Steve Tharinger, D-Sequim, and state Sen. Jim Hargrove, D-Hoquiam, sponsored companion bills — HB 1916 and SB 5829 — that would add between $7 million and $8 million more per biennium from the state general fund to pay a larger share of Medicaid reimbursements for sole community hospitals.

State Rep. Kevin Van De Wege, D-Sequim, co-sponsored the House bill.

“This bill would bring us up to 73 percent of costs,” Lewis said.

“Unfortunately, these bills did not get out of committee, and Friday was kind of the deadline.”

However, the Peninsula lawmakers “are going to try to push these bills as far as the 2013-2015 biennium budget,” Lewis said.

“These bills are real important to Olympic Medical Center because it will give us a chance to remain financially viable.”

More than three-fourths of OMC patients are on government-paid insurance: 56 percent on Medicare, 11 percent Medicaid and 9 percent on other government programs.

“Government pays lower amounts and tends to be more unstable,” Lewis said.

“So we really are going to encourage the public in the coming weeks and months, and we would like for the chamber to consider supporting these bills.

“Large rural hospitals, I think, are just as important as smaller rural hospitals. I think Forks and Jefferson definitely need their reimbursements, but we want to make sure our reimbursement is adequate to keep us viable.”

OMC officials also are keeping close watch on a public policy bill that would expand Medicaid.

“There may be as many as 4,500 people in Clallam County eligible for expanded Medicaid,” Lewis said. “And I think our elected officials are working on that.”

OMC posted a 0.9-percent profit margin in 2012 with $133.5 million in operational revenue and $133.4 million in total expenses.

“We're basically breaking even,” said Lewis, who earns $176,000 per year.

OMC provided $10 million in uncompensated care in 2012, which accounted for 7.5 percent of its revenue.

When asked how the public can help, Lewis said: “I think what we need is our elected officials to hear from local voters about what's important.”

“Perhaps emailing your elected officials can be a big way to help, the chamber could take a look at that.”

OMC has a legislative advocacy link on its home page at www.olympic with a rundown of the key issues and contacts for state and federal representatives.

“I think maintaining local services really makes a difference for quality of life and our viability as a community,” Lewis said.

“And we're very determined to do that, but we need some help from Olympia.”

Reporter Rob Ollikainen can be reached at 360-452-2345, ext. 5072, or at

Last modified: March 04. 2013 6:15PM
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