Besides the Olympic Medical Cancer Center project, expansion plans for Olympic Medical Center’s Sequim campus are likely to slow down following anticipated cuts to Medicare reimbursements to off-site clinics.
Olympic Medical Center commissioners last week approved a 2019 budget that addresses the $1.7 million loss the hospital faces as a result of cuts from the federal Centers for Medicare and Medicaid Services.
The budget calls for the public hospital to maintain all services and keep all current employees, but some services will now be offered on the main campus instead of off-site.
“The biggest area we’re going to do is we’re going to move services closer to the hospital in the medical office building,” OMC CEO Eric Lewis told the board on Nov. 21.
“Several services we currently do at Eighth and Vine will move to the medical office building and they aren’t subject to this 30 percent cut.”
Moving those services accounts for a $500,000 savings because they would then be unaffected by the cuts.
Lewis told Sequim City Councilors on Nov. 26 that rumors about OMC planning to shut down the Sequim campus are not true.
“We’re going to keep everything we have open and maintain our workforce,” he said.
Earlier this month, the Centers for Medicare and Medicaid Services announced it would move forward with 60 percent cuts to Medicare reimbursements at off-site clinics, despite about 1,780 letters and comments from Clallam County residents arguing against the measure.
The final rule phases in the 60 percent cut to OMC in practice expense reimbursement for patient visits more than 250 yards from the Port Angeles hospital.
“I just cannot believe cutting physician practices by 60 percent makes sense, particularly in a rural area,” Lewis said on Nov. 26.
“We did everything we could. We left nothing on the table and CMS still decided to do the cut.”
As a result, reimbursement to OMC will be cut by about $1.7 million in 2019 and another $1.7 million in 2020, officials said. The cost over 10 years is about $47 million.
After moving services, the hospital is still facing $1.2 million in cuts, which are absorbed in the 2019 budget.
The largest cut in the OMC budget ($495,000) is to professional fees. That cut was primarily possible because the hospital recently hired two medical oncologists.
Salaries and benefits will be cut by $343,000 because the hospital will not be hiring as many employees as anticipated and will be cutting overtime costs.
Supplies were cut $116,000 while purchase services were cut $85,000. A number of other smaller cuts were made as well.
“That really helped us balance the 2019 budget,” Lewis said on Nov. 21.
He said staff are also proposing to defer the Sequim Primary Care expansion, a $5 million capital project, and defer the Sequim Outpatient Surgery project, also a $5 million capital project.
“Unfortunately, the big challenge is we can’t continue to expand,” Lewis told city councilors.
“We can’t afford the construction and hiring all the employees given the 60 percent cut. That’s very disappointing to me personally.”
Next year’s budget leaves the hospital with a $4 million positive margin, which Lewis said is needed for paying principal on debts and investing in buildings.
Revenues are budgeted for $213 million and expenses are budgeted at $209 million.
Commissioners also approved a 1 percent increase to its levy, which amounts to a $42,000 boost. Levy funds are used to maintain trauma level-three services, birth center services and provide services to all patients regardless of ability to pay.
Lewis said OMC leaders remain committed to the Sequim campus and its future plans.
“Our board of commissioners is committed to that; we just have to go incrementally slower than we planned,” he said.
One bright spot, Lewis said, is that OMC commissioners approved an approximate $4.43 million bid from JMG Construction on Nov. 21 for expanding the Cancer Center.
He said construction will tentatively begin in February and finish late in 2019.
Following the hiring of two medical oncologists, Lewis said they’ll have more than 60 employees at the Sequim center and anticipate purchasing a nuclear medical camera for about $500,000.
He said the Olympic Medical Center Foundation is providing about one-fourth of the cost for the expansion, and about $125,000 for the camera.
As the hospital braces for the cuts, it is also preparing to sue federal government over the cuts.
On Nov. 7, the hospital board agreed to join the American Hospital Association’s lawsuit against the federal Department of Health and Human Services over the cuts.
A spokesperson for the AHA said the lawsuit would likely be filed in U.S. District Court in Washington, D.C., in the coming weeks. OMC is expected to join a handful of other hospitals across the country in the lawsuit and may seek an injunction to block the cuts while the litigation is pending.
Lewis said on Nov. 26 that reversing the decision for off-site cuts may be a multiple year process.
“Hopefully the lawsuit will be helpful in reversing this,” he said.
Lewis added that right now people should wait to write more letters until they have a clearer picture on how productive they can be.
“You can certainly count we will come to bat whenever it’s necessary for the next step,” Sequim Mayor Dennis Smith said.
Lewis said OMC leaders are also working on a plan they intend to announce in February about operating more efficiently.
“There definitely could be major changes and expand what we do in Sequim,” Lewis said.
For more information about Olympic Medical Center, visit www.olympicmedical.org or call 360-417-7000.