Edition 22
Financial Stability Project:
Last week, I held a series of all-employee meetings to discuss our financial position and to solicit feedback, ideas, or questions about the situation. We had a great turnout and I appreciated all of the questions and ideas. For those who weren’t able to make it, I want to summarize the conversation.
For the last several years, we have had stable revenues, increasing costs, and decreasing reimbursements. We have also invested in our campus with new boilers, roofs, a lab remodel, a clinic build, and HVAC projects. These projects were necessary but increased our debt and used cash reserves.
In 2024 it looked something like this:
In addition to the long-term shortfall, we have a short-term cash crunch as we transition our revenue cycle from CPSI to Cerner. HIM and Billing are working diligently to process claims, and we’ve begun to see reimbursements from Cerner patients start to come in. We are utilizing our cash reserves to pay the bills while we catch up on payments.
In 2025, we have a few positive changes. We’ve already reduced our daily costs by a few thousand dollars a day, and our most recent Cost Report (pink) has increased our anticipated reimbursement. The 2025 Safety Net Assessment Program (purple) was recently approved and will result in increased Medicaid payments.
Even with the good news, we still have a daily shortfall of approximately $2,000, which needs to be addressed through increased revenue, higher reimbursement, or reduced expenses.
With our current projections, we require a modest course correction to get back on track. However, it might get worse.
I have serious concerns related to our expenses and reimbursements. Inflation, tariffs, increased fees, and taxes will make controlling our costs difficult. On the reimbursement side, a significant effort is underway at the federal level to cut Medicaid spending. The two areas that seem most likely to impact us are work requirements for Medicaid patients and state-directed payment programs.
Although most Medicaid patients are already working, the extra bureaucracy of proving eligibility and tighter restrictions are expected to reduce the number of patients covered. Washington State has expansive Charity Care laws that will mean that as fewer people are on Medicaid, their hospital care will still be provided, but we will not be compensated.
State-directed payment programs are Medicaid supplemental programs that have become a target for cost-cutting. In Washington, we benefit from the Safety Net Assessment Program (shown in purple on the diagram) and Pro Share. Together, these programs provide approximately $ 3,000 per day in additional reimbursement.
At the meetings, I discussed several items we have already taken to improve the 2025 outlook and to prepare us for the expected changes to Medicaid. We’ve cancelled some vendor contracts, consolidated a few positions, instituted a non-clinical hiring freeze, and a wage freeze for any job titles not covered by the union.
We discussed other potential actions and identified opportunities for service expansion, cost reduction, and revenue cycle enhancements. Based on these ideas, we have several projects underway to identify opportunities for improvement. As much as possible, my preference is to grow our services and take steps to be better compensated for the work we are already doing. Thank you all for your interest and great ideas. I know this work is hard, and I’m always open to answer any questions or hear your ideas.
Meet Goose. He is blissfully unaware of Medicaid.
A single-topic newsletter? Is that even allowed?